Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — Energy

Power Stations

Mr. Stoddart: asked the Secretary of State for Energy whether any studies are being made by his Department and the Central Electricity Generating Board to see what financial savings can be made by re-planting existing power stations when they reach the end of their planned life rather than replacing them with completely new power stations.

The Under-Secretary of State for Energy (Mr. Norman Lamont): I am advised by the CEGB that, in general, its assessments show the replanting of older stations for power generation to be less economic than constructing new nuclear or coal-fired generating capacity. The Department discusses this subject with the board from time to time.

Mr. Stoddart: Is the Under-Secretary aware that I find that reply entirely surprising, bearing in mind the enormous amount of capital involved in land and buildings at existing power stations? Will he get in touch with the CEGB and examine its figures, because I feel sure that significant savings could be made in the Government's capital programme?

Mr. Lamont: Of course I shall do that was not raying that there were no circumstances in which replanting would be economic. An example of where it would be is perhaps the Drakelow C station. No decision has yet been made on that station, but studies indicate that re-planting there might be economic. That does not mean that it would earn the same rate of return as a new nuclear station. Those are the sorts of considerations that have to be borne in mind.

Mr. Rost: As many power stations are near town centres or industrial sites and the CEGB no longer wants to run them, because it does not regard them as economic, what discussions has my hon. Friend had with industry or local authorities to make sure that the CEGB can sell those lower stations an scrap value, so that they can be converted into combined heat and power stations by those who wish to do that?

Mr. Lamont: That matter is being discussed by the CEGB with a number of parties. My hon. Friend is right to say that in some city centre locations it would be

possible for power stations that are no longer required to be used for CHP schemes. They might have a role to play during the construction of the heat network of any CHP scheme. The cost of maintaining a power station that has already served its design life might be too high for a long-term role, but, my hon. Friend certainly has a point.

Gas and Electricity Stamps

Mr. Thomas Cox: asked the Secretary of State for Energy what discussions he is having with the Post Office in seeking the sale in main post offices of gas and electricity stamps.

Mr. Norman Lamont: None direct, Sir. But I have had discussions with the gas and electricity industries about the possibility of selling stamps in post offices. The industries have agreed with the National Federation of Sub-Postmasters to make gas and electricity stamps available through sub-post offices. Selling stamps through main post offices is subject to the British Telecommunications Bill receiving Royal Assent.

Mr. Cox: Does not the hon. Gentleman agree that his reply indicates the stupidity of the system? Stamps can be sold in sub-post offices but not at main post offices. Many pensioners face increasing problems in meeting gas and electricity bills and it would be of great benefit to them if, when they drew their pensions, they could buy gas and electricity stamps, as they can buy stamps for television licences. Will the hon. Gentleman press the matter more strongly?

Mr. Lamont: I agree that stamps should be available through post offices. That is why one of the first things that we did was to discuss that possibility with the industries. As a result, stamps are available through sub-post offices. However, because of the long-standing provisions of the Post Office Act 1969, it is not possible to sell stamps through main post offices or over the counters of sub-post offices. That provision will be removed by the British Telecommunications Bill if the House approves it. The position would be improved along the lines that the hon. Gentleman has suggested.

Mr. Thompson: I welcome my hon. Friend's reply, and I am sure that sub-postmasters wilt be delighted with the new development, but will he consider with his ministerial colleagues the possibility of a single stamp being transferable throughout the range of public services—television, gas, electricity and so on?

Mr. Lamont: I do not know about energy stamps being interchangeable with television stamps, but the gas and electricity industries will already accept each other's stamps. That was another change that we enabled to take place, though it has not been widely publicised. I wish that more people were aware of it.

Energy Costs

Mr. Hal Miller: asked the Secretary of State for Energy what representations he has received from British industry regarding energy costs.

Mr. Campbell-Savours: asked the Secretary of State for Energy if he will make a statement on Government policy on energy prices.

Mr. Palmer: asked the Secretary of State for Energy if he will make a statement on the Government's energy pricing policy.

Sir David Price: asked the Secretary of State for Energy what steps he is taking to ensure that British industry does not pay higher prices for its fuel and energy than its European competitors; and if he will make a statement.

The Secretary of State for Energy (Mr. David Howell): I have received representations from the CBI, trade associations, companies and individuals on energy costs. While I would not agree that, in general, our energy costs have risen faster than, or are now above, those of our European competitors, it is, however, clear that some firms, especially in energy-intensive industries, have been hard hit. I have been discussing with the energy supply industries ways of helping to meet these problems. We are also vigorously pursuing cases of unfair foreign competition in energy pricing.

Mr. Miller: Does my right hon. Friend understand industry's suspicion that the Government have aggravated the difficulties by seeking to make energy prices a source of taxation? Does he appreciate the industry's resentment that it is being selected as much cow for that purpose?

Mr. Howell: I understand the suspicion, but it is not well grounded. The Government expect industry to meet the external financing limits, by reducing costs, not by passing them on. Tight EFLs are a healthy and desirable discipline on the efficiency of nationalised industries. However, I recognise that high energy costs are hitting industries. We have taken, and are taking, a number of steps to ease the specific problems experienced by individual industries and firms.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall call first those hon. Members whose questions are being answered, in the order in which they appear on the Order Paper.

Mr. Campbell-Savours: Taking into account the constant level of investment in wages, plant and equipment and raw materials by competing manufacturers overseas and the constant prices that their products command on the world markets, how does the Secretary of State expect British industry to compete when it is paying higher energy prices?

Mr. Howell: All countries in the Western world are facing high energy costs. That is the consequence of the last 18 months, when the price of crude oil increased by about 150 per cent. Heavy fuel oil, even after tax, is cheaper here than in France, Denmark, Belgium and Ireland. I understand that the price in West Germany has now overtaken ours. That may not remain so, but that is the present position.
I have asked the Gas Corporation to review the need to charge full oil-equivalent prices for new supplies. All over Europe prices are rising fast, and may have overtaken ours in many cases. Electricity boards are being asked to consider whether they can provide greater flexibility for the large, continual user. The coal industry is meeting the challenge to compete effectively with world market prices for coal. All that means that we are moving in the right direction. However, everyone in the world must face and adjust to high energy costs. It would be fatal to insulate ourselves from them.

Mr. Palmer: Does the Secretary of State understand that relative energy pricing is his Department's most fundamental responsibility? Is he aware that in neglecting that issue he is putting on British industry burdens additional to those that it carries already because of the Government's policies?

Mr. Howell: I am not sure what the hon. Gentleman means by "relative energy pricing". If he means that our energy prices, together with energy distribution prices, should be competitive, he is correct. We are seeking to improve competition, and we are making some progress. That duty is being fulfilled to the benefit, including security of supply, of British industry.

Sir David Price: Is my right hon. Friend aware of the basic difference of fact between what he and his ministerial colleagues say and what is represented to us by large continual users of energy, such as the chemical industry? Will he meet the Chemical Industries Association urgently to see whether at least there can be agreement about the facts so that we might have a slightly more reasoned debate on possible policy?

Mr. Howell: I welcome the thought behind my hon. Friend's question. We did get together with the CBI, which has produced an initial report. This is to be supported by more evidence, since it was rather thin originally. We have had submissions from, and talks with, a number of industries. We find that there is no basic division of view on the overall general energy price position. The division involved individual cases. Some industries are paying more than their European competitors, and some substantially less. Companies that are paying more obviously feel badly treated. There is no basic division of view about the facts. Where there is a division, we are establishing the realities.

Mr. Park: Is the Secretary of State aware that checks made in the last few days indicate clearly that Italy and Spain are paying 18½p and 20p per therm respectively for gas? Is he aware that the average price in Britain is 30p

Mr. Howell: The average price of gas is not as high as that. The average is in the mid-20s. Spot checks can reveal large variations. However, the evidence is that throughout Europe substantial increases are taking place. In West Germany, Ruhrgas is establishing prices for renewed contracts, let alone for new customers, which are considerably higher in many cases than they are here. I do not dispute that unfavourable disadvantages for Britain exist in some cases, but, in general, the pattern is less unfavourable—and, indeed, moderately favourable—for British industry. That is what we wish.

Mr. Forman: Will my right hon. Friend confirm that realistic energy pricing is an indispensable part of his Department's energy conservation policy? Will he ensure that it is always presented in such a light, instead of as a means of improving the financial position of nationalised industries?

Mr. Howell: My hon. Friend is right. The economic pricing of energy is sensible in energy policy terms. That is why it is pursued in all countries, and that is why the United States, which has pursued other policies disastrous to the world and to itself, is moving rapidly in that direction.

Mr. Eadie: Does the right hon. Gentleman accept that he has failed this afternoon to answer questions about


energy pricing Does he agree that it is not a question of the document that we have all received being a little thin? Does he accept that British industry is suffering from high energy prices and that it is disappointed because of that? The right hon. Gentleman mentioned coal and West Germany. Is he aware that West Germany gives a bigger subsidy than Britain does to its coal industry and that that disadvantages the British coal industry?

Mr. Howell: I understand the hon. Gentleman's feelings. The best way to help firms in difficulty is to concentrate on their particular problems, rather than resort to unproven generalities. That is what my Department seeks to do. By doing that we shall ensure that competitive power is increasingly available on advantageous terms to British industry. That is the aim of our policy. We must concentrate on specifics. Generalities are of no help to anybody.

Mr. Patrick McNair-Wilson: Does my right hon. Friend agree that the meeting of the International Energy Agency that he will attend in Paris tomorrow will have a profound effect on both prices and supply? Will he urge the other members of the agency to adopt a much more realistic policy towards the stocking that has taken place as a result of the war in the Gulf? Does he agree that if the hoarding of fuel continues there is a danger, not only of price war, but a cut in production by some of the major world suppliers?

Mr. Howell: I agree about: the importance of the meeting. At present the world oil position is not unmanageable, and we must take steps and have the maximum international co-operation to ensure that it remains so. If we succeed we shall have greater stability in world oil and energy prices in the future than we had in the last year or so. The price of failure would be high indeed.

Mr. Hardy: Does the Secretary of State recognise that there seems to be a contradiction between his initial answer, when although he suggested that some firms were hard hit he appeared to reveal an appalling complacency about the problem? Does he recognise that British industry will see the contradiction, if he cannot, and that industry generally, especially those industries that are hard hit, are becoming sick of the inertia that he is showing in this matter, since he appears to rest his policy entirely on the hype that other people will raise their prices and forfeit the advantage that they now enjoy?

Mr. Howell: The hon. Gentleman is utterly confused, both about my answer and about his assessment of the situation. British industry recognises that the overall policy of economic energy pricing is correct and that we should, wherever possible pursue examples of unfair foreign competition, as we are doing. It is also recognised that, for particular firms and individual cases, there are problems, which the Government have sought to meet by dealing with the supply industries—gas and electricity—and with the oil industry and by ensuring that our heavy fuel oil at this moment, even after our tax, which is admittedly high by European standards, is cheaper than that of probably every other European country. That is dealing with the problem.

Electricity Disconnections

Mr. Dubs: asked the Secretary of State for Energy what representations he has received about the number of electricity disconnections that have taken place in the current year.

Mr. Norman Lamont: I have received letters from three hon. Members, plus representations from the Child Poverty Action Group, the Electricity Consumers' Council, the London Boroughs Association and the National Council for One-Parent Families.

Mr. Dubs: Is the Minister aware that disconnections by the London Electricity Board are increasing rapidly, and that in June to September of this year there were more than double last year's total? What action can now be taken to protect pensioners, people with young families and others from the harsh winter?

Mr. Lamont: I entirely share the hon. Gentleman's concern. I met the chairman of the LEB last week to discuss this matter and impressed upon him the need to ensure that the code of practice on disconnections was observed. I have also discussed the matter with the Gas Corporation and the Electricity Council. As a result of those discussions the industries have agreed to two amendments to the code of practice, the details of which I shall give in an answer later today. The effect of the changes is that, first, the hardship criteria for the availability of pre-payment meters will be removed, so that meters will be more widely available; and, secondly, that the plight of the sick and the disabled, who were revealed as a particular problem in the PSI study on disconnections, will also be referred to in the code. I hope that those two steps will result in some improvement in what I agree is a worrying situation.

Dr. Glyn: My hon. Friend is aware of the pre-payment argument, but one of my constituents who is on supplementary benefit was allowed to run up an account of no less than £800 because of incompetence on the part of the DHSS and the electricity board. Will he please review his decision that no one should be held responsible, that there should be no disciplinary action and no surcharge? Does he further agree that it was only when I insisted that a pre-payment meter should be installed, in the interests not only of the board but of the consumer, that that was done?

Mr. Lamont: I agree that in that case it would have been better if a pre-payment meter had been available for my right hon. Friend's constituent, but in these circumstances the boards are in a difficulty. If they allow large debts to run up they are criticised; on the other hand, if they disconnect people before those debts are run up, they are still criticised. However, I understand my hon. Friend's concern in this case.

Mr. Freud: I think the whole House will welcome what the Minister has said about the provision of prepayment meters. What arrangements are being made for their provision, and will they be manufactured in this country?

Mr. Lamont: I have no information on the second point, but I shall look into it and write to the hon. Member. I have no reason to think that such meters cannot be


available to meet the demand, and I have stressed to the industries that I think that these arrangements should be publicised as much as possible.

North Sea Oil (Licences)

Mr. McQuarrie: asked the Secretary of State for Energy when he will be in a position to announce the full list of successful applicants for the seventh round of licensing of exploration in the North Sea.

The Minister of State, Department of Energy (Mr. Hamish Gray): I expect to announce shortly the names of successful applicants for blocks in the company own choice area and to complete the awards for all blocks early in the New Year.

Mr. McQuarrie: I am sure that that news will be much welcomed by the major companies that have applied for licences, but in making the final selection for the balance of the licences will my hon. Friend bear it in mind that some smaller consortia have been formed in the North-East of Scotland with local investment and that they should be given due consideration when the remainder of the blocks are allocated?

Mr. Gray: I realise the great interest that my hon. Friend has taken in this matter. I can assure him that both large and small British companies and consortia will have their proposals carefully analysed and assessed according to the criteria that have been published.

Mr. Douglas: Can the Minister assure me that all these administrative details will be completed to allow the drilling to begin in next year's weather window? Will he undertake to ensure that, so far as possible, any drilling activity in the North Sea is given to United Kingdom-based companies?

Mr. Gray: The Government hope that the drilling on seventh round licences will get under way next year. Of course we will welcome maximum participation by United Kingdom companies.

Mr. Skeet: Is the Minister aware that the recent tax proposals in the Budget will have a serious effect on exploration and development in the North Sea? When I put down a question to him it was answered by the Treasury instead. Does that mean that the Department of Energy is against these proposals?

Mr. Gray: My hon. Friend has been in the House long enough to know that there is such a doctrine as collective responsibility. The Department of Energy does not share his view. It has been suggested to us that there have been seven variations in taxation since this Government came to power, but six of those variations were decided upon before the announcement of the seventh round of licensing, and that round has broken all records in the number of applicants. Therefore, my hon. Friend's fears are on this occasion a little misplaced.

Energy Conservation

Mr. Jim Marshall: asked the Secretary of State for Energy if he will make a further statement on the need for energy conservation measures in the home.

Mr. Greville Janner: asked the Secretary of State for Energy whether tie will take steps to encourage

consumers in the United Kingdom to install insulation, solar heating and other energy saving or energy creating methods.

The Under-Secretary of State for Energy (Mr. John Moore): The best incentive for householders to use energy efficiently is realistic pricing of fuels, coupled with a vigorous information and advice campaign. We have increased expenditure on publicity by 30 per cent. in real terms, and backed this with research to identify additional steps which may become cost-effective.

Mr. Marshall: Is not that reply somewhat hypocritical at a time when real expenditure on home insulation grants is decreasing? Will the Minister urge the Secretary of State to confer with the Secretary of State for the Environment, in order to increase those grants, both to assist the comsumer in the long term and to improve employment prospects in the glass-fibre industry?

Mr. Moore: I do not think it in the least hypocritical to face the reality of the difficulty of allocating a rare resource such as public expenditure. To the extent that, in an ideal world, it would be pleasant to be able to fill all grant needs and all grant requirements, obviously I take the hon. Gentleman's point, but to the extent that it is in householders' and tenants' interests to invest in energy conservation methods, one hopes that they will be able to do it with their own funds.

Mr. Jessel: If people wore an extra layer of clothing, such as an extra vest or an extra sweater, not only in homes, but in offices, shops and factories, might there not be a massive saving in fuel?

Mr. Moore: I am sure that my hon. Friend will have been delighted to notice the attractive sweater that the Secretary of State is wearing—clearly to draw that point to the attention of his ministerial colleagues at the IEA meeting later today.

Mr. Hooley: Is the Minister aware that what is required is not more money for publicity, but more money for insulation grants? Is he aware also that the murderous assault by the Secretary of State for the Environment on the housing investment programme is totally undermining the Government's programme for domestic insulation?

Mr. Moore: No one would deny that investment in insulation—in energy efficiency, in that sense—is cost-effective. The only question that seems to be at issue is: who is to foot the bill for the investment—the State or the individual? I think that all of us, on both sides of the House, recognising the priorities for public expenditure, would expect people to do this themselves, as it is in their long-term interests to do so, and that decisions which they themselves take about their long-term investment would be much more effective and genuine and would lead in the long term to changed demand patterns. Investment comes better from the individual than from the State.

Mr. Banks: When does my hon. Friend expect to introduce standards for new housing, to ensure that adequate insulation measures are incorporated?

Mr. Moore: That is a matter for the Department of the Environment, which is still involved in the process of consultation. We have been involved in that process. We expect improved insulation standards to be recommended when the DOE document finally sees the light of day.

Coal Industry

Mr. Ioan Evans: asked the Secretary of State for Energy what representations he has had from the National Union of Mineworkers concerning the damaging effects which Government economic policies are having on the coal industry.

Mr. John Moore: It is always open to the NUM to bring its views to my attention, either in coal industry tripartite meetings or indeed at any time.

Mr. Evans: Has the Minister seen the NUM's publication entitled "The Miners and the Battle for Britain", which claims that the future of the coal industry is being placed in jeopardy, that the Government have reneged on the expansion plan, which has been in existence since 1944, and that a. new financial straitjacket has been imposed on the NCB by the Coal Industry Act? Does he realise that the NCB has marketing problems because of the downturn in the demand for steel? Will he consider these problems and meet the NUM to discuss them?

Mr. Moore: I have read the publication to which the hon. Gentleman refers. I spend a considerable amount of my time happily in the pits and coal areas of Britain. Despite the obvious difficulties in some areas, and despite the recession, we should bear in mind the improved productivity and the sense of success in maintaining and hatching the financial strategy, rather than berate the coal industry and the Government. One should not ask for congratulations on the Government's performance from the Dispatch Box, but the industry should be congratulated on keeping within the strategy at an extremely difficult time.

Mr. Edwin Wainwright: Does the Minister realise that, due to the stockpiling of coal and the Government's general attitude to the mining industry, there is fear in the industry that in the near future the Government will be on a collision course with it? Why do we not have more investment? Why cannot we have greater utilisation of coal? Why cannot we do something about the fluidised-bed system, which would bring coal to the fore?

Mr. Moore: I have difficulty in accepting the hon. Gentleman's comments. The industry is receiving over £800 million in long-term capital productive investment, which matches the requirements of "Plan for Coal". The industry is within a four-year financial framework. Despite the difficult circumstances in which we live, the industry is achieving its goals. We should be complimenting it and welcoming the long-term development of the fluidised-bed boiler systems. There is a question on the Order Paper on that topic.

Energy Conservation

Mr. Chapman: asked the Secretary of State for Energy if he is satisfied with his Department's progress in encouraging maximum energy conservation.

Mr. Waldegrave: asked the Secretary of State for Energy whether he is satisfied with progress on energy conservation in the United Kingdom.

Mr. David Howell: I am satisfied that the Government's energy conservation policy is making a substantial contribution to improving the efficiency of energy use in this country.

Mr. Chapman: Will my right hon. Friend confirm that a high proportion of total energy consumption takes place in buildings, and that therefore the design and insulation standards of buildings assume much more critical importance than hitherto? Will my right hon. Friend assure the House that there is the closest co-ordination with the Department of the Environment on, for example, standards for building regulations? Does my right hon. Friend's Department propose to take any initiative, with organisations such as the Royal Institute of British Architects, that will lead to more energy-conscious designs?

Mr. Howell: We have constant discussions with bodies such as the Royal Institute of British Architects. There is constant attention to conservation. It is right that the major advances that can be made in efficiency lie very much in the areas of space heating and building design.

Mr. Waldegrave: Following my right hon. Friend's answer to my hon. Friend the Member for Carshalton (Mr. Forman) on the matter of energy costs, will he clarify the relationship between the Government's conservation policy and pricing? Will he confirm that no nationalised industry has asked to add anything to its prices to meet the Government's target for energy conservation?

Mr. Howell: The move to economic pricing of energy has caused the consumer to adopt the most efficient use of energy. That must follow automatically. Substantial energy conservation is taking place, and energy use has fallen to a far greater extent in the past year than is justified merely by the effect of the recession. The nationalised industries, the suppliers, are concerned to promote conservation, and do so. The pricing policies of the oil and gas industries are governed predominantly by market considerations, and those of the electricity industry predominantly by the long-run marginal cost of the replacement unit of capacity.

Mr. Crowther: In view of the deterrent effect of the top interest rates that industrialists must pay for any sort of borrowing for capital investment, would it not be helpful if the Government were to provide preferential interest rates for any sort of installation of plant or machinery, which would have the effect of making the use of energy more efficient?

Mr. Howell: One would like to see as much encouragement as possible of new investment in preparation for recovery in energy-saving machinery and technology. My Department intends to increase its spending on energy conservation demonstration projects in the next financial year. That is an important intermediate phase between research and the commercial use of new machinery that saves energy. However, once the industries see a commercial process in which it is worth investing it is up to them to decide their priorities in terms of investing in one process and not another. That is the most sensible approach. As interest rates come down, as they have been doing, the industries will have greater opportunities to choose which investment to make.

Mr. Beaumont-Dark: Bearing in mind my right hon. Friend's well-known desire to conserve energy, will he tell us why the British Gas Corporation is allowed to blackmail people into using more energy than they need, with minimum contracts? Surely that is diametrically opposed


to Government policy. Industry is charged for what it has not used, and encouraged to use what it does not need. Is it not time that that was changed?

Mr. Howell: I am not sure that that is the position. The details of contracts will be a matter for the chairman of the British Gas Corporation, and I shall call his attention to my hon. Friend's question. In general, if a contract is made to supply gas at a certain rate of off-take, a large investment has to be made in pipelines and basic capital equipment. The supplier and the customer enter into a contract, which both sides are expected to keep.

Mr. Freeson: Why does not the right hon. Gentleman take action on pricing generally? Why do we persist in having a system of pricing that means that those who consume the most pay least, and those who consume the least, who are often the poorest in our community, pay the highest unit charges?

Mr. Howell: I know that it is confusing. However it is not the case that those who consume the least are the poorest and that those who consume the most are the best-off. It is often the other way round. Many very large families have to consume a considerable number of units. The British Gas Corporation and the electricity supply industry have been asked to review their patterns of charges to reflect the need both to cover costs and to have the most sensible supply tariffs. I am satisfied that they are constantly seeking to achieve the best solutions to meet those problems.

Oil from Coal

Sir Anthony Meyer: asked the Secretary of State for Energy when he expects to announce a decision to go ahead with the two pilot plants for extraction of oil from coal at Point of Ayr colliery in North Wales.

Mr. John Moore: I have nothing to add to the statement made by my hon. Friend the Under-Secretary of State for Energy on Monday 24 November.

Sir Anthony Meyer: As Britain has a world lead in this technology, and as we have the human and natural resources to sustain it, would it not be fatal for our future as an advanced industrial nation to cut out the project in the interests of short-term economies, however pressing the need to implement them may be?

Mr. Moore: As my hon. Friend made clear in a recent Adjournment debate, a process of discussion and debate is taking place on this issue. I accept his argument on technological abilities, human availability and the resources that we have in this area, but that does not mean that we must not be careful when it comes to taking a decision.

Mr. Eadie: Is the Minister aware that in his recent Adjournment debate the hon. Member for Flint, West (Sir A. Meyer) made the case that something should happen immediately, in the interests of technological development in Britain? Does the hon. Gentleman understand that we are becoming concerned about the many delays for which the Department of Energy is responsible in the technology of producing oil from coal? Does he recollect that he gave an assurance to the House on the Third Reading of the Coal Industry Bill that the Government would provide as much money as the Labour Government for oil-from-coal projects? When are the Government to do that? It is urgent for Britain, and urgent for coal.

Mr. Moore: It is important to confirm my hon. Friend's remarks in the Adjournment debate, when he rightly paid tribute to the hon. Member for Midlothian (Mr. Eadie) for the initiative and lead that he took when he had the position that I now have the privilege to hold. Beyond that, he laid out the programme clearly and made it clear in his work that the decision to be taken was of great complexity and importance. No matter how quickly we may wish to take that decision, considerable time and effort must be put into it. As soon as the decision is made, the House will be told.

Coal Industry (Productivity)

Mr. Knox: asked the Secretary of State for Energy what has been the increase in labour productivity in the coal mining industry over the most recent 12-month period for which figures are available.

Mr. John Moore: At 2·43 tonnes, overall output per manshift in National Coal Board deep mines in the four-week period to 22 November 1980 was just over 2 per cent. above the level in the corresponding period in 1979.

Mr. Knox: Does my hon. Friend agree that, in current conditions, that is a very satisfactory increase? Does he expect output to continue to increase in that way over the next 12 months?

Mr. Moore: I entirely agree that it is very satisfactory and exactly on target. It confirms my earlier remarks that if that sort of achievement continues to be matched the miners and the Board will deserve respect.

Mr. Welsh: Is the Minister aware that for mining to continue to increase productivity it must have increasing investment? Will he therefore assure us that any increased expenditure for the National Coal Board resulting from the second Social Security Act will be over and above the borrowing powers allowed in the Coal Industry Act?

Mr. Moore: I shall obey your injunctions, Mr. Speaker, and try to answer one question. Increased productivity comes from many different factors. One must compliment it. However, I remind the hon. Gentleman that capital investment in the coal industry this financial year is in excess of £800 million, which is matched by the miners' excellent work in increasing productivity.

Gas Prices

Mr. Adley: asked the Secretary of State for Energy if he will make a statement on relevant European Economic Community discussions on differential pricing of gas, in the light of the resulting unfair competition.

Mr. David Howell: The European Community is committed to move towards economic pricing. Where there is unfair competition, we are pursuing it, as we are in the case of Dutch horticulture.

Mr. Adley: I recognise that horticulture is not precisely my right hon. Friend's ministerial responsibility, but does he agree that the problems caused by the Dutch concern energy, and not horticulture? Will he therefore seek an immediate meeting with his right hon. Friend the Minister of Agriculture, Fisheries and Food, to see whether a system of grants and loans can be set up to cover the interim period while the court case is being heard, because many of our horticulturists are in severe difficulty? Will


he accept that if this is done many people will go out of business through no fault of Her Majesty's Government, or because of anything that is being done in this country, but purely because of the unfair competition that the industry is facing?

Mr. Howell: I recognise the severe difficulties confronting our horticulture industry and that of other countries as a result of the unfair Dutch competition. That is why the European Commission is pressing the Dutch Government and is on the paint of taking legal action if it fails to get satisfaction. That is the right way forward. My hon. Friend has talked with the horticulture industry and is well aware of the problems. Interim or bridging aid for the industry is a matter for my right hon. Friend the Minister of Agriculture, Fisheries and Food.

Mr. Dalyell: Will the right hon. Gentleman accept that "on the point of taking legal action" is an elastic term in Brussels? Does it mean the spring, summer or autumn?

Mr. Howell: It means as soon as possible. In the past, certain cases where State aid has been challenged have been dealt with very quickly indeed. I cannot prophesy how quickly this matter will be dealt with, but the Commission is under considerable pressure from member Governments particularly this Government. I believe that there is a good chance that the matter will be completed urgently.

Mr. Eggar: What discussions have taken place between my right hon. Friend's Department and similar departments in other EEC countries about building a cross-Channel pipeline, which would be one way to equalise gas costs?

Mr. Howell: None, Sir.

Coal Industry

Mr. Patrick McNair-Wilson: asked the Secretary of State for Energy when he expects to meet the chairman of the National Coal Board to discuss the external finance limit for the industry for this financial year.

Mr. John Moore: I have frequent meetings with the chairman of the NCB to discuss the board's progress with its financial strategy.

Mr. McNair-Wilson: Following my right hon. Friend's reply to a question from my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller), may I ask whether he is aware that there is a widely held belief that the very tight EFLs are being passed on to the consumers in the form of higher prices? Does legislative machinery exist to prevent that?

Mr. Moore: We have the Monopolies and Mergers Commission. I cannot give my hon. Friend any further information at the moment, but we shall contact him to tell him whether there are other processes that can be used.

Mr. Palmer: Why should productive investment by nationalised industries be subject to Treasury restrictions?

Mr. Moore: With respect, I do not regard the ability to watch the ways in which public money is spent and the attempt to keep normal control on it as in any way restrictive. Investment is provided, and it is the job of Government to make sure that it is wisely and properly spent.

Oral Answers to Questions — House of Commons

Oral Statements

Mr. Winnick: asked the Chancellor of the Duchy of Lancaster how many oral statements have been made by Ministers to the House during the current Session.

The Chancellor of the Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): Four, Sir, and two Business Statements.

Mr. Winnick: Is the Leader of the House aware that, on this side of the House at least, we are becoming increasingly irritated by the way in which major items of policy are planted in Hansard by means of written questions, such as, for example, the extension of the 6 per cent. pay policy for local authority employees? Will he tell his Cabinet colleagues that the House expects full statements on major items of policy, instead of information being sneaked into Hansard?

Mr. St. John-Stevas: The hon. Gentleman may be irritated, but his irritation is not justified. In all the statements that have been made, oral or written, the appropriate precedents have been followed. Although we must follow those precedents, it is a positive advantage for Ministers to be able to come to the House to explain and defend Government policies. They are able to do that all the better when questions are put, not always totally aptly, by Opposition Members.

Mr. Adley: As a matter of interest, how do my right hon. Friend and his colleagues manage to keep up with the constant game of musical chairs on the Opposition Front Bench? How do they know who will answer what?

Mr. St. John-Stevas: I agree. It is quite difficult, but we hope that the matter will be resolved today. As for musical chairs, I find my role as Minister for the Arts helpful.

Mr. Christopher Price: Merely because the Labour Government did so occasionally, is that an excuse for the Government sneaking written answers in at toe last minute? Can the right hon. Gentleman at least assure us that on Thursday 18 December, the next to last day of term before Christmas, he will not sneak in important answers in response to written questions, which would mean that the House could not scrutinise them until the middle of January?

Mr. St. John-Stevas: I do not sneak in any answers. I enjoy making oral statements to the House, and I am distressed when my business questions are cut down.

Parliamentary Facilities

Mr. Moate: asked the Chancellor of the Duchy of Lancaster, what consideration the Services Committee is currently giving to the provision of extra parliamentary facilities.

Mr. St. John-Stevas: The Services Committee presented a report to the House last Session, which, if implemented, would enable a considerable extension of facilities to be made in the long term. In view of the present lack of funds for new facilities, the Committee is concentrating on seeing that the existing facilities are used to the best effect.

Mr. Moate: Does my right hon. Friend agree that there is virtually no prospect—nor should there be—of funds being made available for the redevelopment of the Bridge Street site? Will he therefore seriously contemplate a new initiative to allow a joint public and private venture approach to the site, particularly one financed by private capital?

Mr. St. John-Stevas: I am concerned about the inadequate accommodation that undoubtedly exists for hon. Members. It is an interesting suggestion that we could use private capital for that purpose, which I shall pursue. It is constructive and useful.

Mr. Merlyn Rees: With regard to the idea that was put forward by the hon. Member for Faversham (Mr. Moate), whether or not we agree with it, is it not the case that we have never debated the Casson report? Before replying to an off-the-cuff idea, would it not be sensible to debate the report on the Floor of the House?

Mr. St. John-Stevas: I do not think that any useful purpose would be served by an early debate on the Casson report, because we know that public money is not available, but I am not against a debate at some stage. My hon. Friend's remark was not an off-the-cuff idea, because he has written to me about it.

Mr. Rost: What does my right hon. Friend intend to do about the unacceptable rising cost of running the Palace of Westminster? How can he, the Government and hon. Members expect the country to follow the example that we are supposed to be setting for restraint in public expenditure, when ours is such a bad example? Is there not much evidence of wastage and inefficiency in the running of the Palace of Westminster that should be cut out?

Mr. St. John-Stevas: I do not agree with my hon. Friend. I think that we get good value for money in this House. The House of Commons Commission, which is responsible for these matters, is constantly looking for ways to make economies, and we shall continue to do so.

Mr. Freeson: Is the Minister aware that we know that he wanted the building to be erected but that he was given instructions from elsewhere that it was not to be built? Will he tell the House the approximate annual cost of erecting that building across the way, on the assumption that it will take about seven years to construct, which is a reasonable amount of time? Will he check with the Treasury as to whether the proposal that he has received this afternoon and in a previous letter would be acceptable by its rules on public expenditure? Will he also tell the House when we may expect to get rid of that slum across the road, which is a disgrace not only to this House but to London?

Mr. Robert Atkins: The right hon. Gentleman must not talk about the Treasury like that.

Mr. St. John-Stevas: I was going to say that I did not know to which particular slum the right hon. Gentleman referred. With regard to his question concerning the time of seven years, he will appreciate that I cannot answer that immediately, but I shall write to him with the appropriate figures. We must accept that there is a shortage of money. Some hon. Members would like the accommodation across the road, but others would not. I am most anxious to ensure that hon. Members have adequate facilities, but we have to cut our coat according to the cloth.

Visitors' Tickets

Mr. Dalyell: asked the Chancellor of the Duchy of Lancaster if, in view of the long queues in St. Stephen's, Members' difficulty in getting tickets, and the usual significant number of empty places in the Strangers Gallery, he will institute a study of the system of allocating visitors' tickets to the House.

Mr. St. John-Stevas: No, Sir. The accommodation and Administration Sub-Committee of the Services Committee considered this matter only last November, and it was of the opinion that the present arrangements should not be varied, except that Admission Orders should carry a request in bold print that Members should return any Admission Orders to the Admission Order Office if not required. I have arranged for that to be done, and there has been a slight improvement in the number of Admission Orders returned for use by others.

Mr. Dalyell: Is the right hon. Gentleman aware that if he had arrived a quarter of an hour early for prayers last Thursday, he would have seen my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris) and five parliamentary colleagues sitting on the Government Benches, queuing to get a favourable position in the unseemly daily rugger scrum that surrounds the Serjeant at Arms' chair in order to get tickets? Is he further aware that some hon. Members feel that that is less than necessary, because many people pocket their tickets or leave it until the last moment to return them? Is the right hon. Gentleman aware that we are complaining about the system, not about the courteous staff of the Serjeant at Arms' Department? Will he examine the matter again during the winter, before the inevitable happens next summer?

Mr. St. John-Stevas: I cannot keep referring the matter to a Committee of the House. If a Committee has recently investigated a suggestion and come down against it, there is little further that I can do. The solution to the problem lies in the hands of hon. Members. As I have said, there has been a slight improvement, but I appeal once again to hon. Members to return any unused tickets, or tickets that are unlikely to be used, in good time.

Dr. Glyn: Is my right hon. Friend aware that the Members' Gallery is in use on very few occasions? Could not there not be some flexibility in the use of it, to enable more visitors to be accommodated?

Mr. St. John-Stevas: We keep the situation under continuous review. We see the number of Admission Orders for the Special Galleries, and we look at the Diplomatic Gallery. If those seats are not used they should be available to Members for their visitors, and they are.

Mr. English: What are the views of the right hon. Gentleman on why children visit the Tower of London more frequently than they visit the Palace of Westminster? Is he aware that the Department of the Environment employs more than 100 information officers, one of whom is an education officer who is solely responsible for showing schoolchildren the Tower? Why has this House no such officer?

Mr. St. John-Stevas: That is an interesting suggestion, and I shall look into it on behalf of the hon.


Gentleman. I imagine that more children visit the Tower of London because they find it more intrinsically interesting than the activities of this House.

Mr. Freud: Does the right hon. Gentleman accept that, in view of the normally riveting nature of our debates, it would be sufficient for most visitors if they had tickets enabling them to sit in the Public Gallery for 15 minutes, and no more? Is the right hon. Gentleman aware that that would make it easier for hon. Members to accommodate coach parties from their neck of the woods for short periods?

Mr. St. John-Stevas: I shall consider that suggestion, but it is a dangerous remark for the hon. Gentleman to make. If he continues to make remarks such as that, he may end up in the Tower.

Oral Answers to Questions — Intervention Board General Deposit Account

Mr. Alton: asked the Paymaster General what is the total amount paid out by him through the Intervention Board general deposit account during the first six monthe of 1980.

The Paymaster General (Mr. Angus Maude): The total amount paid out by my Department through the Intervention Board general deposit account during the first six months of 1980 was £272,987,804·85.

Mr. Alton: Is the Paymaster General aware that one of those pennies was sent out in a cheque from the Intervention Board to J. P. Lamb and Co., a Liverpool firm? Does he believe that it is in accordance with the Government's declared policy on financial good housekeeping and sensible economics to inflict on a firm a cheque worth 1p, which takes £4 to process?

Mr. Maude: If the hon. Gentleman will send me details of that I shall look into it, but I must point out that my Department acts only as banker and financial agent for the board, and it is for the hoard to answer that question, since its instructions presumably resulted in that being done. The board is answerable, not to me, but to the Minister of Agriculture.

Oral Answers to Questions — Public Relations

Mr. Robed Atkins: asked the Paymaster General if he is satisfied with the current state of Government public relations.

Mr. Maude: No Minister in any Government has ever been wholly satisfied with this. But Ministers and Departments are making every effort to explain the Government's policies, and there are clear signs that the message about our essential strategy is getting through.

Mr. Atkins: Does my right hon. Friend agree that the flexibility of the 6 per cent. cash limit is getting across to people? Is he aware that I refer particularly to the local authority employers' offer to the firemen of a two-stage settlement, without affecting the 6 per cent. limit?

Mr. Maude: Yes, I am certain that the message has got through. There is now a more realistic attitude to pay claims and settlements.

Mr. Ioan Evans: Has the right hon. Gentleman seen the Granada TV programme "World in Action" about the Rossminster Group and the accusations that have been made against the Secretary of State for Trade, the Financial Secretary to the Treasury and the Minister of Agriculture? As that affects the Government's public relations policy, will a statement be made?

Mr. Maude: That matter could not possibly arise out of the original question.

Oral Answers to Questions — Economic and Social Policies

Mr. Christopher Price: asked the Paymaster General when he intends next to meet the press to explain the economic and social policies of the Government.

Mr. Maude: In addition to meetings with individual journalists, I make frequent visits to the regions, where I take every opportunity to meet editors and representatives of the media.

Mr. Price: Does not the Paymaster General consider that a strong, simple message is necessary to get over the Government's economic and social policies to the country? Will he consider reproducing that poster showing the long queue of unemployed people, but leaving out the word "Labour" from the sentence "Labour isn't working", and inserting the words "The Thatcher Government"?

Mr. Maude: The poster to which the hon. Gentleman refers was issued by the Conservative Central Office, for which I have no responsibility.

Mr. Adley: As the Leader of the Opposition is in his place, would my right hon. Friend like to take this opportunity to thank him and all his colleagues for making the Government's job so much easier?

Mr. Maude: It is not very Christian to rub salt into wounds. I should have thought that the message was obvious.

Oral Answers to Questions — European Community

Mr. Moate: asked the Paymaster General what measures have been initiated by him to improve the image of the Common Market in the United Kingdom, and why.

Mr. Maude: In consultation with my right hon. Friend the Lord Privy Seal, I have been concerned to help publicise the facts about the economic, political and other implications of Community membership, particularly for British industry and commerce. The reason for this is to let people know the facts and to dispel some of the illusions that adverse propaganda has implanted.

Mr. Moate: Does my right hon. Friend agree that, by her determination and success in the matter of Budget refunds, the Prime Minister has demonstrated that what the Common Market needs is not propaganda but fundamental and genuine reform? Will my right hon. Friend tell the House whether it is the Government's policy, particularly with regard to the speeches of the Minister of Agriculture, Fisheries and Food, enthusiastically to defend the common agricultural policy, or fundamentally to reform it?

Mr. Maude: I am not concerned, nor are any of my right hon. Friends, with propaganda, but simply with making the facts available. What the Prime Minister has


done, and what all my colleagues have done, is to try to call attention to those aspects of Community policy that do not serve the interests of this country and to get them changed. What my right hon. Friend the Minister of

Agriculture has continually said is that the principles of the common agricultural policy and the purposes for which it was set up are right, but that what is required is a complete review of the financial ways in which it is functioning.

Orders of the Day — Social Security (Contributions) Bill

Order for Second Reading read.

The Secretary of State for Social Services (Mr. Patrick Jenkin): I beg to move, that the Bill be now read a Second time.
The Bill gives effect to the decisions on national insurance contributions and the Treasury supplement to the national insurance fund that were announced by my right hon. and learned Friend the Chancellor of the Exchequer in his statement on Monday 24 November and in the details of national insurance given in a written reply by myself on Tuesday 25 November.
The Bill is accompanied by the usual money resolution and a Ways and Means resolution. The latter is required to authorise clause 1(1) and clause 3 of the Bill. Clause 1(1) creates additional income for the Consolidated Fund by raising the earnings limit for class 1 contributions, thus increasing the yield on the national insurance surcharge. Clause 3 increases the National Health Service allocations from national insurance contributions and thus creates additional income for the Consolidated Fund.
As the House knows, in the ordinary course of events changes in the rates of national insurance contributions and the regular annual increases in the upper and lower earnings levels, which have to be fixed each year, are normally made by statutory instrument. This year, because the Government have decided to make a number of changes that cannot be achieved by order, a Bill is necessary. The opportunity has been taken to include all the changes in the Bill, including those that could have been made by order.
Last Thursday, the Leader of the Opposition, who has just left his place, complained that it was unsatisfactory that proceedings on the Bill should be dealt with on the time scale outlined by my right hon. Friend the Chancellor of the Duchy of Lancaster. I, too, regret the necessity for this, but necessity is the word. I should point out, as my right hon. Friend the Chancellor of the Duchy of Lancaster did on Thursday, that it hardly lies in the mouth of the Leader of the Opposition to complain about this. He it was, after all, who made precisely the same arrangements for the Bill introduced by the previous Labour Government that first imposed the national insurance surcharge on employers. We are following exactly that precedent.
I am sure that the right hon. Member for Salford, West (Mr. Orme) will recognise that the reason why the Bill has to become law before the end of January is that it is necessary for my Department to send out to employers details of the arrangements, including tables, in time, so that the new rates of contribution can become operative from 6 April.

Mr. David Ennals (Norwich, North): Bearing in mind the right hon. Gentleman's justification for introducing the Bill, will he tell us whether he supported the measure that was introduced by the previous Labour Government? Did he not oppose it then? What is his justification now?

Mr. Jenkin: I opposed the surcharge but accepted the necessity for the timetable. It was only the timetable that I was talking about.
We have in the Bill a number of changes that go beyond the scope of the usual orders. There is the increase of ¼ per cent. in the contribution from employees to the National Health Service; the ½ per cent. from employees, to raise around £½ billion to go into the national insurance fund; and the reduction in the Treasury supplement to the national insurance fund, which is paid from the Consolidated Fund on behalf of the general taxpayer. None of these changes could have been made by order, hence we have the Bill.
As my right hon. Friend the Chancellor explained in his statement, these changes are part of the Government's overall economic strategy to restrain the growth of the public sector borrowing requirement. If the Government borrow too much, the effect must be to keep interest rates too high and so to add to the difficulties of the private sector at a time of world recession. The Chancellor told the House about the cuts in public spending of £1 billion, which the Cabinet have agreed for next year. The changes in the Bill to raise extra revenue will reduce the PSBR next year by a further £1·5 billion.
That reduction will be achieved by increased contributions. The main effect of the changes in benefits on the PSBR will not he felt until the next contributions review. This, I think, meets the point raised by the Social Services Select Committee in its third report.
The reason why the Government have decided to put most of the additional contribution burden on employees is that the combination of a high exchange rate and high interest rates works to the disadvantage of the corporate sector and, on balance, to the advantage of the personal sector. High exchange rates, while squeezing corporate profits, reduce the cost of imports, including food.. High interest rates press a good deal more hardly on corporate borrowers than on personal borrowers, whose debt tends to decrease in real value year by year.
The Government are very well aware of the strains on manufacturing industry during a period of structural change, and felt that this was not the right moment at which to impose on industry extra burdens in the form of higher national insurance rates. I stress the word "rates". Of course, as the right hon. Member for Salford, West—and particularly the right hon. Member for Leeds, East (Mr. Healey)—must have known, employers must expect to pay their share of the normal increase in national insurance contributions due to the increases in the upper and lower income levels.
That happened every year under legislation passed when the Labour Government were in power. I find it inconceivable that either the right hon. Member for Leeds, East or the right hon. Member for Salford, West could ever have imagined that, somehow, what my right hon. and learned Friend the Chancellor of the Exchequer meant in his statement was that the absolute level of employers' contributions would remain unchanged. [Interruption.] If ever there were a bogus row, that was it.
I must now turn to the Bill. It might be for the convenience of the House if I were to deal first with the extra National Health Service contributions, to be found in clause 3, and then to deal with the points about the Treasury supplement, in clause 2. Finally, I shall cover the total effect on contributions, including the effect on employers'.
Clause 3 increases the National Health Service allocation from employees' class 1 contributions from 0·4 per cent. of earnings to 0·65 per cent. The employers'


contribution to the National Health Service will remain unchanged at 0·6 per cent. of earnings. The rates for other classes of contributor also go up by corresponding amounts.
The effect of these changes is to raise about £250 million in the next full year, the whole of which will go to the National Health Service. It will bring the proportion of the cost of the National Health Service met by contributions from about 8·3 per cent. in the current year to about 10 per cent. next year. The increase for the man on average earnings is about 32p per week—or about the price of half a pint of beer.
At the last election my party gave a commitment to maintain the gross spending plans of the National Health Service in line with the projections of our predecessors, as set out in their 1979 White Paper on public expenditure. Last year, as the House knows, the cash limit squeeze and the raising of VAT led to a reduction in real terms of about £170 million in health authorities' revenue spending. Against that must be set the sum of £360 million, which the Government provided to finance pay increases awarded by Clegg and the review body, and for which the Labour Party had made no provision whatsoever. This year we made good that shortfall of £170 million and added a further ½ per cent. real growth to spending by health authorities. Next year's spending on the Health Service provides for a growth of about 1·7 per cent. in real terms, bringing the planned spending in 1981–82 to about £8·2 billion in England, or to £9·9 billion in Great Britain.
The House will remember that in the White Paper on public expenditure, issued last March, we indicated that part of this growth in spending for 1981–82 would be financed by increased charges, mainly on road accidents and on sight testing. In the event, the House indicated its great dislike of charges for sight testing, and it has so far proved impracticable—as the right hon. Member for Norwich, North (Mr. Ennals) found when he attempted to go down the same road—to devise a satisfactory scheme for recovering more of the costs incurred by the Health Service from road accidents.
Accordingly, next year we would have started about £100 million short of the spending foreshadowed in the White Paper of last March. In addition, the Treasury, faced with the need to find further economies in public spending, naturally looked for some help from the third biggest spending programme. Nevertheless, the Department has to cope with the increasing requirements posed by the rising number of elderly persons and by demands for improved services. Those hon. Members who listened to Friday's debate on the maternity services and on perinatal mortality know what those demands can involve. In addition, the Department has to cope with the effects of advancing medical technology. Therefore, the Government decided that cuts in the National Health Service on the scale that would have been necessary were unacceptable. Accordingly, apart from a smal saving on account of increased efficiency, the Government decided that the growth in spending on the National Health Service should continue as planned.
Therefore, we were faced with a choice between a reduction in services—which would inevitably fall on the sick, the old, the handicapped and others in need of health care and treatment—and asking those in work to pay a bit more by way of National Health Service

contributions. In our view it was better to raise the contributions. Faced with the same choice, the House and the country would have made the same decision. Last Friday, every speaker from the Opposition Benches demanded that I should spend more money on supporting better maternity services. I look for their 100 per cent. support for clause 3.
It is not as though there is anything sacrosanct in the proportion of NHS spending that is financed by contributions. I am sure that all hon. Members will agree that there is a popular misconception to the effect that the Health Service is paid for entirely by contributions that are deducted from pay. Of course, Mr. Speaker, you and I know that that is not right. Most of those contributions—formerly known as "the stamp"—go on paying for pensions and other benefits. Only a small part goes on paying for the National Health Service. Since the inception of the NHS a small proportion of the contribution has gone to finance it.
In the 1950s about 10 per cent. of the cost of the service was financed in this way. During the 1960s the figure rose to over 17 per cent. In the 1970s it fluctuated between about 5½ per cent. and 9½ per cent. As I said, the effect of the change contained in the Bill will be to raise the figure to about 10 per cent.
Clause 3(3) gives power to vary the rate of NHS contributions both for employers and employees. The existing power is linked unnecessarily to changes in the rates of national insurance contributions both for I hope that the House will agree that it seems sensible to break that link and to enable the House to amend the rate of the NHS contributions separately and independently from the amount necessary to finance cash benefits. Although I seek to take this power, I must make it clear that no decisions have been taken about the rate of NHS contribution for the years after 1981–82. However, the House will know that I and my hon. Friend the Minister for Health have repeatedly said that it is our belief that people will be ready to pay more by way of a specific contribution for health than thay are prepared to pay through general taxation. They know that the money paid will go to maintain or improve the Health Service. I repeat; no decisions of any kind have been taken for the years after 1981–82.
Clause 2 reduces the Treasury supplement from the figure of 18 per cent. of contribution income—at which it has stood for five years — to 14½ per cent. The Treasury supplement, sometimes called the Exchequer contribution, has been made since the national insurance scheme was set up in 1948. The amount of the supplement has varied over the years in order to take account of changes in the social security scheme and the state of the national insurance fund. When the scheme started in 1948 the total of Treasury payments as a percentage of flat-rate contributions was just under 33 per cent., and rose to about 35 per cent. in 1950–51. In the early years of the scheme full benefits were paid to many whose contribution record fell far short of the amount necessary today to qualify for a full pension.
Therefore, in those years it was entirely proper that the general body of taxpayers should make a substantial contribution to the fund. During the 1950s and 1960s the Treasury supplement fluctuated from less than 15 per cent. to nearly 25 per cent., but from about the middle of the


1960s it was relatively stable, at between about 17 per cent. and 20 per cent. For the past five years, under the Social Security Act 1975, it has stood at 18 per cent.
Although the rate of the supplement to the fund has thus remained stable since 1975, support for social security from the general taxpayer has grown considerably in real terms over those five years. In particular, the big increases in supplementary benefit and the new contributory benefits have put extra burdens on the Consolidated Fund. In 1975–76, the Treasury supplement amounted to £2,162 million, while expenditure or, non-contributory benefits, excluding family allowances and child benefit, amounted to a further £3,051 million, making a total of £5,213 million. Those figures are all at constant prices. During the current year, 1980–81, the Treasury supplement has risen to £2,820 million and expenditure on non-contributory benefits has risen to £3,851 million, making a total of £6,671 million to be found by the taxpayer.
In five years, £5,213 million has become £6,671 million at constant prices. That is an increase of 27 per cent. in real terms in the taxpayers' contribution. During the same period, total contributions paid by employers and employees and other contributors to the national insurance fund have grown by only 7·8 per cent. in real terms.

Mr. Ennals: Does the right hon. Gentleman accept that the new figures proposed in the Bill will take the taxpayers' share to the lowest proportion since the creation of the national insurance fund?

Mr. Jenkin: No. With great respect, if the right hon. Gentleman had been following my arguement he would know that it is quite unreal to take the taxpayer's contribution to the fund as separate from what the taxpayer contributes by way of non-contributory benefits as a whole—things which are charged directly on the Consolidated Fund.
As I said, the total amount of taxpayers' support for social security has risen 27 per cent. in five years, while the total amount raised by contributions to the fund has risen by only 7·8 per cent. That is a particularly striking contrast.
Given that disparity, and given the urgent need to reduce pressure on the public sector borrowing requirement, we have concluded that the time has come to place greater emphasis on direct contributions. For the reasons which I have already explained, this year that means direct contributions from employees. Accordingly, we are increasing the contribution for employees by 1 per cent. of earnings, raising the rate from 6·75 per cent. to 7·75 per cent. As I said, one-quarter of this is for the NHS, one-quarter is the usual amount needed to cover increased benefits, and the rest will go to the national insurance fund to reduce the amount paid by the general taxpayer.
The Treasury supplement was originally paid in order to avoid flat-rate contributions bearing excessively on the low-paid. Today, contributions are almost all earnings-related. Accordingly, it seems right that the Government should take power to adjust the balance between contributors to the fund—including, in this case, the Treasury—in the light of economic circumstances. It is obviously undesirable to have to resort each year to primary legislation to make changes of this sort. Therefore, of clause 2(2) gives power to vary the rate of supplement by up to 2 per cent. in either direction in a future tax year.
Perhaps I may end this part of my speech by saying—here I come to the point raised by the right hon. Member for Norwich, North—that even after the reduction of £529 million made by clause 2 in the amount of the supplement, it will still be about 9 per cent. higher in real terms than it was in 1975–76. [Interruption.] It will be 9 per cent. higher in real terms. The right hon. Member for Norwich, North must not ignore that. I hope that the House will agree that at this time this is a sensible step for us to be taking.
Clause 1 provides for the increased rate of contribution of employees, including married women, and of the self-employed. The clause also increases the lower and upper earnings limits. I gave the details in a written answer that appeared in Hansard on 25 November and in the Government Actuary's report on the financial provisions of the Bill. As always, that report is a mine of information. about the effect of the contribution increases on different categories of contributor and on the effect on the national insurance fund. I often think that a number of hon. Members are not aware of just how much information can be gained from the Government Actuary's report.
The impact of the increase on employees will mean that for a man with weekly earnings of £100 the increase will be £1 per week; for a man on average weekly earnings of about £130 a week the increase will be £1·30; and for a man on £200 a week the increase will be £2. These are for people who pay the full rate. The rates for contracted-out employees between' the lower and upper earnings limits will go up from 4·25 per cent. to 5·25 per cent. Of course, no one will welcome paying more, but the fact of the matter is that benefits have to be paid for and it is those in work who have to pay for them by their contributions.

Mr. Ennals: The right hon. Gentleman is cutting the benefits.

Mr. Jenkin: The contributions pay able by women who have opted out of the full rate will go up from 2 per cent. to 2·75 per cent.
In response to the right hon. Gentleman's intervention from a sedentary position, perhaps I may say that if we had not taken steps to limit the growth in benefit payments in the social security scheme, contributions would have had to be even higher.

Mr. Ennals: Is it now true that, on the one hand, the right hon. Gentleman is increasing the contributions to the national insurance fund and, on the other, in other legislation he is reducing the entitlement to receive benefit from the fund? Is not he undermining the whole principle of the insurance scheme, which is written into the national insurance fund?

Mr. Jenkin: On the contrary, by raising the proportion of funding of the national insurance fund that comes from contributors we are strengthening the contributory principle.
Married women and widows who have opted-out of the full payment will pay the increased NHS contribution. They also contribute to the cost of the national insurance scheme, from which they benefit. The increases for them are a little higher, proportionately. The reason for that is that in 1975 the reduced rate for opted-out married women was set at 2 per cent., while the standard rate of contribution for employees was 5·5 per cent. That 2 per cent. figure has remained unchanged in the last five years,


while the standard rate has risen to 6·75 per cent., and under the Bill it will rise to 7·75 per cent. In these circumstances it seemed to us to be right this year to go some way towards restoring the original differential.
Married women who have opted for the lower rate of contribution are still getting a very good bargain, and the value of the option will have increased marginally.
Some anxiety has been expressed about the impact of the Bill on the self-employed. No doubt this is something that we shall wish to explore in detail in Committee. At this stage I make only two points. These increases in no way prejudice the review that we launched in October of self-employed benefits and contributions—a review that we had promised in our election manifesto. We undertook then — and we are engaged in it now with the self-employed — an examination of their comparative contributions and benefits in relation to those of the employed population as a whole. The present increases in the Bill are no more than is necessary to maintain the same relationship between the self-employed and employed contributors as has existed for some years past.
The other point is that these higher self-employed contributions will be taken fully into account in our studies. They will in no way prejudice the outcome of that investigation.
I come to the effect of the Bill on employers. Employers' contributions are affected in three ways.

Mr. David Stoddart: The right hon. Gentleman has omitted to say what the figures for employees' contributions would actually mean for contracted-out contributors. He read the figures for those contracted in, but he did not say what the figures would mean on a weekly basis for those contracted out.

Mr. Jenkin: I gave the figures. If I could look back through my notes I might be able to find them. Perhaps the hon. Gentleman will be able to read them in Hansard.
I was coming to the effect of the Bill on employers. Employers' contributions are affected in three ways. First, they obviously rise automatically when wages rise. Secondly, they rise with the regular increase in the upper earnings limit. That happens every year. Thirdly, they can, of course, rise if the employer's rate of contribution rises. This year we have not increased the employer's rate. It stays unchanged at 10·2 per cent.

Mr. Andrew F. Bennett: Why did the Government choose to take the highest point rather than the mid-point?

Mr. Jenkin: I appreciate that intervention. That is an argument that the House will want to explore. I shall explain the reasons.
The Government Actuary has estimated that during 1981–82, on the assumptions that he was given about earnings and so on, an extra £394 million in contributions would be paid by employers even if we left the earnings limits unchanged, and left the rates unchanged. That is nearly £400 million simply from the normal impact of inflation. But it goes further than that. The Social Security Act, passed under our predecessors, requires me to review for each tax year the lower and upper earning limits. The lower limit must approximate to the basic pension of a single person and the upper limit has to be between six and a half and seven and a half times that rate.
These limits were part of the bargain struck between the national insurance scheme and occupational pension schemes. Those figures could not be changed without a drastic revision of the assumptions on which that bargain was based. The reasons why the limits have to be changed regularly are, first, to safeguard the value of contribution incomes against inflation and to prevent the national insurance fund going into deficit, and, secondly, to prevent the value of earnings-related pensions declining in real terms. The increase in contributions from employers from the change in the earnings limits in 1981–82 is estimated by the Government Actuary at £282 million.
Quite separately from all this, there is the effect of the national insurance surcharge imposed by the Labour Government. My right hon. and learned Friend the Chancellor felt that in present circumstances it would not be wise to reduce the rate of the surcharge. This means that rising wages and the higher earnings limit will increase automatically the revenue from the surcharge by £295 million. All these figures and a number of others have been published in a Treasury press release, which is available in the Library of the House.
The increase for employers is an inevitable consequence of the operation of the national insurance system. If I may say so, hon. Members who were Ministers in the Labour Government must know this. I know, too, that many of my hon. Friends were anxious that the Government should do what they could to shield employers from increased contributions at the present time, and this we have done. The increase that it is estimated they will pay in money terms is 8·3 per cent., which is significantly below the anticipated rate of inflation. The contributions will therefore represent a reduction in the burden on employers in real terms.
I turn to the question raised by the hon. Member for Stockport, North (Mr. Bennett) of the upper earnings limit, which the Bill fixes at £200 per week. The question that has been asked is whether it needs to be as high as that at the upper end of the bracket.
Should it not be either in the middle of the bracket, at £190 per week, or, as the right hon. Member for Leeds, East suggested the other day, at the bottom of the bracket, at £177 per week? If it were set at the bottom of the bracket, at six and a half times the basic pension level, the deficit on the fund next year would have been about £237 million. If the limit had been set at £190 per week there would still have been a deficit, though reduced to £64 million. Setting the upper earnings limit at £200 per week, at the top of the bracket, will produce, as is made clear in the Government Actuary's report, an estimated surplus of just £39 million. I am sure that the hon. Member for Stockport, North, with his great expertise, will recognise that that is a tiny proportion of the total outgo and must therefore be within the margins of error.

Mr. Andrew F. Bennett: Surely choosing a place on the scale is a matter of Government intentions. If the Government had said that they were deliberately making life harder for employers they could justify the top point. But the Government claimed to be doing all that they could to protect employers. If they were, they should have picked the middle point, as is custom and practice, or have gone for the lower point.

Mr. Jenkin: If we had gone for the middle point and accepted an estimated deficit of £64 million, one way of


dealing with that would have been to put up the employees' contribution still further, perhaps by a further 0·1 per cent., from ¼ percent. to just over that, or we could have trimmed benefits further. I doubt whether the hon. Gentleman would have liked that. Given the figures this year, given the rising numbers of unemployed—and unemployment benefit conies straight out of the fund—in order to keep the fund in surplus, even by the very modest figure of £39 million, we needed both an extra ¼ per cent. on he employees' contributions and an upper earnings limit of £200.
Some Labour Members have argued that the upper earnings limit should be abolished altogether. I could not possibly advise the House to adopt that course. The upper earnings limit is a ceiling not only for contributions but for earnings-related pensions and the guaranteed minimum pension provided by contracted-out pension schemes. Removing it for contributions, and so breaking the link with pensions, would undermine the basis of the partnership with the private sector, which was so painfully but, in the end, successfully worked out by my right hon. and learned Friend the Chancellor—then the Opposition spokesman—and the late Brian O'Malley. It is not a course that I could commend to the House.
The Bill is essential because it makes a significant contribution to containing the size of the public sector borrowing requirement next year, and that, in turn, is crucial to the Government's economic strategy. The Bill recognises the pressures on industry and seeks to keep to a minimum the additional burden on firms. At a time when incomes have risen sharply and public expenditure is having to be cut, the Bill makes a significant contribution to the funding of the national insurance scheme and a significant add lion to the financing of the National Health Service.
The Bill is therefore essential to the Government's overall economic and social strategy, and I commend it to the House.

Mr. Stanley Orme: The Bill has three major effects. It increases employers' and employees' contributions, it decreases the Treasury element, and it increases the contributory element in National Health Service funding. Those three aspects must be dealt with in relation to each other because, as the Secretary of State pointed our. they are interrelated in that they represent an entire philosophy, part of which, tragically, has already been seen in the reduction in benefits that has occurred.
Before dealing with those three main issues, I wish to make it plain that the Labour Opposition greatly resent the manner in which the Bill is being rushed through Parliament. Later this week the Committee stage will be taken on the Floor of the House, late into the night. It is my view that a Bill of this kind, not least some of the detailed points that the Government Actuary has raised and which we wish to raise in Committee, should be dealt with in a Standing Committee, particularly as the Bill was not even mentioned in the Queen's Speech—an indication of panic measures being taken by the Government. That comes through very clearly
I turn first to the effect on employers. Here we must return to the manner in which the announcement was made. The total package, including national insurance surcharge, means that employers will have to pay an extra £971 million in national insurance contributions in a full

year. If the Secretary of State did not know this, the Chancellor of the Exchequer should have known. If he knew, clearly he was too afraid of the effect that the announcement would have, not least upon the CBI. The Secretary of State said that we had gone over these words before, but surely there is nothing clearer than what the Chancellor said in his economic statement:
Having regard, however, to the financial pressures on industry and the way in which the employer's share has grown in recent years, employers' contribution rates—including the surcharge — will remain uchanged." —[Official Report, 24 November 1980; Vol. 994. c. 316.]
The right hon. and learned Gentleman had a responsibility to tell the House that £973 million was to be claimed back from the employers.

Mr. Patrick Jenkin: The right hon. Gentleman held office in my Department. He must know perfectly well that there is a clear distinction between the rates of contribution and the percentages—my right hon. and learned Friend the Chancellor had been talking about the percentage increases for employees—and the total burden. If the right hon. Gentleman is really trying to maintain the pretence that despite his knowledge and his years in the Department, he did not know about that, and neither did his right hon. Friend the Member for Leeds, East, (Mr. Healey) he cannot expect to get away with that.

Mr. Orme: I think that the Chief Secretary was more honest outside the House in acknowledging that, in effect, the Cabinet was not aware of it. Perhaps the Secretary of State will say why he had to make that urgent visit to No. 10 Downing Street to clear up this matter. Let us have the facts on the table. In fact, the Government found that because of existing legislation £973 million would be claimed back from employers due to inflation this year. The Government have not come clean on this issue.

Mr. Jenkin: I am sorry to interrupt the right hon. Gentleman again, but he really must not bang on about this. If the Government had wanted to keep something dark, would I have disclosed it all in a parliamentary answer the very next day? The right hon. Gentleman recognises, as my right hon. and learned Friend the Chancellor of the Exchequer indicated, that a statement would be made in the House in the usual way by a written answer.

Mr. Orme: The Secretary of State had no alternative. He had to answer the parliamentary question.

Mr. A. W. Stallard: It was a written question.

Mr. Orme: And, as my hon. Friend says, it was a written question. But perhaps the Secretary of State will say why he went in such haste to No. 10. Why did not the Chancellor of the Exchequer make a statement in the House clarifying the position instead of trying to brazen it out? The facts are on the table for all to see, and I make no apology for returning to the subject today.

Mr. Ennals: Is it not also clear that not only did the House not know—and perhaps right hon. and hon. Members are a little more sophisticated about what these terms mean—but the CBI did not know, that individual firms did not know, that the press did not know and that the country did not know, and that the Secretary of State had to answer the question simply because the Chancellor of the Exchequer refused to give the information?

Mr. Jenkin: Mr. Jenkin rose—

Mr. Orme: I ask the right hon. Gentleman to wait a moment. I will give way to him presently, of course. I endorse what my right hon. Friend the Member for Norwich, North (Mr. Ennals) said. He has made the position quite clear. However, if the Secretary of State wishes to answer my right hon. Friend, I am happy to give way to him.

Mr. Jenkin: The right hon. Member for Norwich, North (Mr. Ennals) knows, because he adopted the procedure himself, as did the right hon. Member for Salford, West (Mr. Orme), that the upper earnings limit on contributions is announced every year by means of a written answer. It so happens that that written answer came the day after the statment by my right hon. and learned Friend the Chancellor of the Exchequer. There is no question of anyone having to rush forward with information. That has always been the plan. It was done in the ordinary way, exactly as it had been done in previous years.

Mr. Orme: It would have been unbelievable for a Labour Chancellor of the Exchequer to make that statement without giving the facts to the House. I can imagine what the reaction of a Conservative Opposition would have been if he had done otherwise. They would have pulled the place down. The way in which the Secretary of State has tried to argue his way out of this only confirms that the Government have misled the country on this issue. We have a right to raise the matter in the House.
At a time of recession compounded by destructive domestic economic policies, this additional burden on employers could be insupportable. The argument is sharper for the reason that, whereas previous Governments have increased the upper earnings limit by about 7 per cent., this Government have squeezed as much as possible out of employers by raising the limit to the legal maximum of 7½ per cent. It is no wonder that the Government did not want to tell employers both pieces of news.
I ask the House to contrast this with the attitude of the Conservative Party when in Opposition, when employers were confronted with increased contributions. I could quote ad nauseam previous speeches by Conservative spokesmen, not least by the Secretary of State, when the surcharge was put on originally. Incidentally, after all their talk, this Government have undertaken to remove the surcharge since coming to office.
Linked with this is the position of the self-employed. I notice that the Secretary of State slipped round this aspect very easily and said that we could discuss it in Committee. But the self-employed also face increased contributions, and their case has always been courted assiduously by the present Government, not least when they were in Opposition. But that is no longer the case. The self-employed now have to face the consequences.
These proposals reduce incentives to employ people, especially part-time women workers, and therefore they have a further depressive effect on the labour market.
I come to the effect on employees. Here the arguments should be judged against the decision to reduce the Treasury element. In the past, rising contributions have been matched with increasing benefits and a stable Treasury element. The Secretary of State underlined that there was a stable Treasury element and had been since 1975. Both rules have now been broken. The principle of

contribution is cynically devalued and benefits have been reduced. It is painful to repeat them. Unemployment benefit, sickness benefit, invalidity benefit, industrial injuries benefit and earnings-related benefit are all affected, and all these benefits are being reduced at a time when they are more necessary than ever.
Those who earn least are now being asked to pay more for the privilege of reduced taxation. This brings the contributory principle into disrepute and, as I said, significantly, this is accomplished 'by a decrease in the Treasury element, which was fixed at 18 per cent. in 1975.
I ask the House to consider what it means. Contributions are payable on the whole of a person's earnings, from the first £1 up to the ceiling. Those with very small earnings are exempted. But the vast majority of earners, even low earners, are above the exemption limit and pay on the whole of their earnings. Income tax, on the other hand, is payable only on income above the tax threshold.
Contributions are payable only on earnings up to the ceiling, which at present is £165 a week and which under the Bill will go up to £200. Income tax has no such ceiling and is progressive. Higher incomes are taxed at higher rates. Contributions are payable only on earned income. Income tax is paid on unearned income, too. Higher employers' contributions mean higher prices in the shops, which hit the poorer sections of the community hardest.
These are facts which cannot be refuted. These are the results of this Bill passing into law. I think that the House will take full note of the consequences. We may not have a very full House, but we are dealing with a very important Bill affecting millions of our constituents.

Mr. Stallard: I should like to hear my right hon. Friend's comment on the fact that although the upper limit has been raised by 22 per cent., which is the average earnings increase, the lower limit has been raised by only 15 per cent. Is this not another hidden tax against the low-paid?

Mr. Orme: If I may correct my hon. Friend, the lower limit is being raised by 17 per cent. But he is quite correct. It is another imposition.
I move on to deal briefly with the Beveridge report, because the Secretary of State referred to the Treasury contribution arising out of Beveridge, and he made the point that people were not paying contributions at the start of the national insurance scheme in 1948 and that it had been necessary to have a higher contribution.
Beveridge envisaged that the contribution would be higher and that at one period it would rise to as much as 46 per cent. of Exchequer input. Beveridge did not believe that it should be reduced. I know that under previous Labour Governments it was fixed, for example, at 18 per cent. in 1975, but many people feel that a contribution of one-third would be a much more equitable distribution. Some of my right hon. Friends will have heard this argument in another context, but I shall not pursue that today. The Bill worsens the position by reducing the Treasury element. It means that the lower income groups will be at a gross disadvantage.
That leads on to one of the main factors in the Government's proposals, that contributions act as a regressive form of tax. As I have already pointed out, the ceiling on contributions means that the richest are exempt but the poorest are not exempt. That must be taken into account.
Many organisations have commented on the equity or social justice of the proposals. In a recent statement the Child Poverty Action Group said:
In previous years rising benefits, paid for by rising contributions, have also been supported by a constant Treasury element.
That happened previously, but it will no longer be applicable under the Bill. The burden will fall on those least able to bear it.

Mr. Patrick Jenkin: Will the right hon. Gentleman deal with the point that I made, namely, that the total Treasury contribution to social security has risen by 27 per cent. in five years, whereas the contribution from contributors has risen by less than 8 per cent.? Does he not think that that calls for some redressing of the balance?

Mr. Orme: I do not accept that. The whole tenor of my argument is a higher Treasury input. We should move above 18 per cent. I make that point clearly to the Secretary of State. I cannot accept his argument.
The Government, faced with more than 2 million unemployed at an estimated cost to the country of £1,072 million next year, have placed the responsibility for supporting those people on the poorer sections of our community. In Committee we shall want to examine the actuarial forecasts, which have been inaccurate recently. I do not know whether the Secretary of State has asked the Government Actuary to take into account the adjustments that he is making. If he does not take them into account, instead of having a small surplus—I do not have the figures in front of me, be they £46 million, £48 million, £56 million or whatever—it is running at more than £600 million, and it could be greatly increased next year. Is there any necessity for that? What will the Government do to correct it? We shall wish to discuss that matter in greater detail.
I turn to the increase in National Health Service contributions. Once again, national insurance contributions are being used effectively as an instrument in fiscal policy in reducing taxation. The Government are refusing to admit the necessity for additional resources that, in fairness, should be raised only through the normal taxation system, which is related to the capacity to pay. National insurance contributions are related to anticipated benefits. This is a deeply cynical move. It is a desperate move when the NHS is so short of resources.
I wish to ask the Government and the House two fundamental questions about this important issue. First, how far can national insurance contributions be used as a covert form of income or employment tax? That question needs to be answered, not least by the Government who are taking the decision. Secondly, how long can the contributory principle survive under the present frontal attack by the Government? Beveridge stated clearly that the contributory principle was that one should be able to pay for a benefit and then receive it as a right. I find it ironic that at a time when the Secretary of State is destroying the insurance principle in relation to the insurance aspect, he is flirting with the idea of introducing a part insurance principle for the health aspect.
The Opposition will need a great deal of convincing before agreeing to move away from the national insurance principle, for the reasons that I have already given. It has been proved satisfactory that people should receive benefits of right. It removes people from means testing.
The second Social Security Act 1980 puts 110,000 people on supplementary benefit that previously were on national insurance contributions.
The principle is being undermined. That could have an adverse effect on people paying contributions. At present they cynically see an increase in national insurance contributions—which is a form of tax, but not on the basis of income tax—coming out of their weekly or monthly pay packets. In return for that, they see the benefits being reduce. I warn the Government that there will be a reaction from those paying contributions if they do not see them justly linked to benefits as of right. It is a serious development which undermines something that has been painfully built up. The Secretary of State was in agreement with the Opposition—when we were in Government and he was in Opposition — to remove people from means testing and to remove some of the problems in that area. He is now creating greater problems.

Mr. Matthew Parris: Does the right hon. Gentleman agree that the insurance principle often pushes people on to supplementary benefit? Not having contributed in many cases, they are eligible only for supplementary benefit.

Mr. Orme: That point relates to people who do not contribute. One of the problems that concerned me when I was in Government was the number of people who became unemployed and were not entitled to benefit because they did not have a full contribution record. I wish to redress that problem by going in the opposite direction to that of the Secretary of State. I want to see everybody entitled to benefit if they contribute. Those who do not contribute will have to be sustained through the supplementary benefit system.

Mr. Andrew F. Bennett: Does my right hon. Friend agree that the Government's policy of devaluing the contribution benefit encourages people to wonder whether paying national insurance really matters? The Government should ensure that people receive good value for money. They should encourage them to have a full contribution record.

Mr. Orme: I accept my hon. Friend's point. I am raising the matter as a serious argument. 'There is a philosophical difference between the two Front Benches about this issue. However, it must be discussed widely in the country. The Secretary of State must put his mind to the matter. We are dealing with 26 million employed people who are contributing weekly. If we are not careful, the whole system will be undermined.

Mr. Patrick Jenkin: I do not think that there is a philosophical difference between the two sides of the House. I have repeatedly stressed the importance in my philosophy of having a contributory national insurance scheme. I do not think that there is any difference between us on that point. The difference arises as to the precise treatment at the margins of contribution as between contributors and Treasury, and the margin of what the social security system as a whole can afford by way of benefits. That is the difference between us. Confronted with the current conditions, I think that the right hon. Gentleman would have been faced with some pretty unpalatable decisions about the social security scheme.

Mr. Orme: I listened to what the Secretary of State said, but I doubt that there is not a philosophical difference between us. The measure that he took in the two Social Security Acts of 1980, and the measures that he now proposes in the Bill undermine the whole contributory principle. We are very concerned about it. We believe that it must be fundamentally opposed.
Turning to health expenditure, I am concerned about the move away from the principle of contributing to the NHS through direct taxation, which was the original method of funding. I know that such funding is not 100 per cent., but that principle has been weakened. The Secretary of State and the Minister of Health have been talking about pressure towards an increase in the activities of the private sector and an increase in the insurance element, but the Royal Commission on the NHS unanimously condemned such a move.
This is a short, but devastating, Bill. It will not assist either the current economic situation or the employment postion. It erodes some basic principles and we do not accept the wider economic arguments concerning the public sector borrowing requirement that have been raised by the Secretary of State.
We shall oppose the Bill at every stage. We shall oppose the money resolution as well as the Second Reading and we shall oppose it in the convoluted Committee stage that is to start on Thursday. It is a bad Bill, which will not assist those on benefit or those who contribute and will not assist employment or the economy.

Mr. Paul Dean: I can summarise my attitude to the Bill in two sentences. If one wills the end—in this case increased pensions—one must will the means. I will the end and, therefore, I support the Bill as the necessary means to that end. I am sure that there will be arguments—we have heard some already—about the details in the Bill, but it is clear that additional contributions are needed in order to meet the increased cost of pensions and other benefits.
The right hon. Member for Salford, West (Mr. Orme) made two main points. His first was that the increased cost should be met by taxation, but he must recollect that the point of no return in increasing direct taxation had been reached by the Labour Government of which he was a member. Does he really think that if he were in Government he would succeed if he went to a Labour Chancellor of the Exchequer to urge that the increased bill should be met by an increase in personal taxation? The record of the previous Government shows that the point of no return along that road had been reached. I believe that he would have had to produce a Bill similar in principle to, though in detail slightly different from, the one that we are discussing.
The other main point made by the right hon. Gentleman was that the Bill undermines the insurance principle, or what I prefer to call the contributory principle. I believe that it does exactly the opposite. The figures that my right hon. Friend the Secretary of State quoted in commending the Bill were reassuring. The measure reinforces the contributory principle on which I thought both sides of the House had been agreed for many years.
The Bill provides the means, and one of the chief ends is the maintenance of the real value of pensions and other

benefits. My right hon. Friend the Prime Minister made that clear again in answer to questions last month, when she said:
The full value of the pension in terms of what it will buy will be preserved. Last year, we added to the provision for pensions because the amount that had been provided was not sufficient This year, we provided more than was warranted by the price increase. The undertaking is to compensate fully for price increases over the lifetime of a Parliament." —[Official Report, 25 November 1980; Vol. 994, c. 488.]
That is a pledge of great significance and value. It is one of the main reasons why the Bill is necessary and should be supported.
I hope that my right hon. Friend the Minister who is to reply will assure us that in carrying out the pledge to maintain the real value of benefits the necessary calculations will err on the side of generosity. It would be unfortunate if we had two years in succession in which calculations produced an under-provision for pensions rather than an over-provision.
Another reason why the Prime Minister's pledge is important is that no groups of pensioners can hope to have adequate bargaining power in modern conditions unless they have a guarantee from the Government of the day underwritten by the Parliament of the day. If there were a scramble for scarce resources between pensioners and the industrial muscle of trade unions, there is no doubt that pensioners would be trampled.
How are we to maintain the pledge and to make it stick in circumstances that are becoming increasingly difficult? My right hon. Friend the Secretary of State has reminded us on a number of occasions of the substantial cost of cash benefits, which are running at the enormous figure of £20 billion a year. Translated into terms that are more readily understood, they cost £400 million a week. That is one-quarter of all public expenditure, and that proportion has gone up substantially in recent years under Governments of both political colours. That is one of the harsh facts that are a background to the Bill.
Another such fact is the growing proportion of the elderly in our community. It is clear that for many years the proportion of retired people will continue to grow and the proportion of working people will continue to decline. In other words, a smaller number of working people will have to find the money to pay the pensions of a larger number of retired people. Not only is the ratio changing, but the proportion of the very old among the retired population is growing rapidly. We are in an age when it is becoming normal for there to be two generations of pensioners in one family. The financial significance of that is considerable.
The third and even more dramatic factor is that we have probably moved into a period in which we must expect lower growth rates in our economy than were achieved in the 1950s and 1960s. There is a growing dilemma and a growing gap between the current programmes and expectations and the resources to meet them. That dilemma was highlighted by the Daily Mail on 1 December in an article which stated:
The crunch has come for the cradle to the grave society.
A similar point was made more fully in Time magazine of 1 December. The article explained that Britain was not alone in the dilemma but that all the advanced countries of Western Europe were facing the same problems.
I shall quote one or two features from that interesting article, which underlined the necessity for the Bill. Time introduces the subject by stating:


They are called welfare states, after the sense of collective passion that inspired them. Like Gothic cathedrals, they rose gradually in Western Europe, the work of whole societies dedicated to a common vision. They grew out of a marriage of Christian social conscience and secular idealism that flourished most dramatically north of the Alps and the Pyrenees — principally in Scandinavia, the Low Countries, Britain, France and Western Germany. Theirs was a force that transcended class divisions and partisan politics. Successive governments, whatever their ideological leanings, added their own benevolent building blocks to the soaring structures.
That describes the vision and the action on it which followed in the early clays after the war.
The article continues to draw some striking conclusions. It states:
Now, for the first time since its brave beginnings amid the ruins of World War II, Western Europe's proud accomplishment is threatened. No one is proposing the dismantlement of the welfare state, but there is a growing realization that the structure is in urgent need of pruning and reform … Across Western Europe social security systems are now either grappling with fiscal crisis or being stretched to the danger point.
The article continues:
After 35 years of expansion, the welfare state seems finally to have reached its fiscal frontiers, unable to promise more and, in some cases, even to fulfil past commitments.
Those are disturbing and disappointing thoughts.
Like many hon. Members on both sides of the House and many people outside, I have devoted time and energy trying to improve our social health services. We have tried to ensure that the second great Commandment—to love one's neighbour—lives in politics. We have tried to ensure that the strong help the weak and that people at work help the young and the elderly. Has the edifice become too heavy for its foundations? Is it in danger of collapsing under its own weight? Is the burden on the workers and wealth producers inhibiting their efforts? Are we in danger of killing the goose that lays the golden egg? These are profoundly disturbing questions. We would fail in our duty to the nation if we did not face them.
In the light of that background, it is all the more important that the establishment of priorities should take on a greater urgency than before and that we should seek the most effective ways to retain the essential fabric of the Welfare State. On the benefit side, the Government have taken the right course in establishing priorities in this parliament. The first priority which my right hon. Friend the Secretary of State established was to defend the real value of long-term benefits. He recognises that in order to do that for the pensioners, widows and others on long-term benefit it is necessary to make some economies in short term benefits.
I remain disappointed about the invalidity benefit, which is a long-term benefit. I recognise why my right Ion. Friend took action on that. However, it is important to remember that a large proportion of people in receipt of invalidity benefit do not pay tax. I hope that the pledge to restore the relationship between invalidity benefit and pensions will be honoured before long.
I remain disappointed about child benefit. I hope that it will be possible to maintain the real value of child benefit. After all, it is now the main support for both families in work and families out of work. In a sense, that will be of greater significance than the proposals for employers to take on responsibility for sickness benefit for the first eight weeks, because that does not give additional recognition to children, which makes it more important for child benefit to maintain its real value.

Mr. Peter Bottomley: The Green Paper refers to income during sickness and discusses the policy of successive Governments to raise the value of child benefit. When the question of income during sickness comes to the House, the Government's resolve must be tested firmly. There is no point in making the proposed change if something extra is not achieved for child benefit so that it is not merely lifted in line with tax allowances or inflation.

Mr. Dean: I am grateful for my hon. Friend's support. He is a well-known campaigner on this subject.
In spite of the sombre background that I have painted, and in spite of my support for the Government's priorities, I wish to express my disappointment in relation to invalidity benefit and child benefit.
I turn to the question of contributions and the Government's priorities. In its general principle, the Bill is right. The arguments used by my right hon. Friend in favour of a bigger percentage increase for employees than employers is impelling in present circumstances in view of the economic difficulties and the burdens on employers in trying to maintain their businesses arid employment. My right hon. Friend's arguments are absolutely right. However, I regret the increase that goes automatically on to the national insurance surcharge. That is a result of one of the unfortunate measures introduced by the Labour Government. We are stuck with it for the time being. Unfortunately, as a result of the increases in employers' contributions there is an automatic increase totalling £104 million on the national insurance surcharge. I regret that, but I recognise that it is impossible to decouple the two provisions in such a Bill.
I also accept in principle the necessary increases for employees. We shall discuss the details and whether the balance is right in Committee on Thursday. We shall wish to return to the arguments expressed by the Child Poverty Action Group and the Low Pay Research Unit. Whatever the argument as to the relative burden on different types of employee, my right hon. Friend's arguments in commending the increase were impelling if we wish to maintain the essential fabric of our social security arrangements.
I also agree with the Secretary of State about the Exchequer supplement. In modern conditions and with the experience of the Labour Government and this Government of direct taxation, one cannot go on increasing tax borne benefits in the way in which they have been increased in recent years.
The right hon. Member for Norwich, North (Mr. Ennals), who unfortunately is no longer present, adduced entirely the wrong argument when he interrupted my right hon. Friend. It is not only the Exchequer supplement to the national insurance scheme that one has to consider but also the tax borne benefits—the supplementary and other benefits—whose cost has increased considerably in recent years. One should consider the total in assessing what support the taxpayer should give through the Exchequer supplement and the other benefits borne entirely by the taxpayer. Here, also, my right hon. Friend has got it about right.
I found it difficult to understand the criticisms of the right hon. Member for Salford, West about the National Health Service element. After all, we have a commitment, which I warmly welcome, to maintain the real value of expenditure on the National Health Service. That is a


considerable pledge when many economies are being made throughout the range of public expenditure. If the NHS is to continue to depend to the present extent on tax-borne revenue, it will be increasingly insecure. I therefore welcome this modest additional revenue for the NHS through the National Health Service element in the national insurance scheme.
There is a sombre background to the Bill. It is unfortunate that the right hon. Member for Salford, West continues to ignore the realities of the situation. We must try to find new ways to maintain progress in increasingly difficult economic circumstances. The Government have shown a realistic approach rather than the head-in-the-sand approach adopted by the Opposition. I welcome the Bill on those grounds as the essential means to try to ensure that we maintain the main benefits, the main fabric of the social services which we have built up so proudly over many years.

Mr. Andrew F. Bennett: I can find nothing in the Bill to recommend it to the House and I suspect that, even if he were pressed, the Secretary of State could not produce one letter received by his Department urging him to bring in such a Bill. I doubt that he has a postcard or any other shred of evidence to show that anyone outside the Government has asked for the Bill.
Directly against the promises by the Conservative Party in its election manifesto that it would cut direct taxes, the Bill represents a glaring U-turn. Most of my constituents talk about stoppages and do not bother to separate national insurance payments from income tax. On most arguments, it is easy to show that they are essentially the same sort of tax and that the Bill is one more way of pushing up inflation. It will certainly be unpopular, and rightly so.
My second criticism of the Government relates to their attempt to rush the Bill through roughly three weeks after it was announced. They had a few presentational problems when they announced it, which drew more attention to it, but the proof is that the majority of people still know very little about the Bill. I checked with 20 people on Saturday and not one really knew what impact it would have on them.
Once again, the Government are trying to stifle opposition and debate. One of Parliament's important functions is the right not just to debate measures here but to stimulate debate in the country so that our debate will be informed. In trying to get the Bill through the House in three weeks, the Government are trying to stifle that debate.
It has been said that the Government must have this legislation in time for 6 April, but they could have allowed much more debate in the House and still got the information to employers so that they could implement the provisions from that date. If the Government put something up, they always do it as early as possible; if they are cutting something, they always delay it. On this occasion, the Government could nave devised a way of following the proper parliamentary procedures instead of cheating both Parliament and country of adequate debate.
National insurance is a regressive tax, and the Government should be criticised for increasing taxation in

this major area. They are moving the burden of taxation from income tax to a more regressive tax. That should be deplored.
Again, in its election manifesto, the Conservative Party referred to the stupidity of taking money from people in work with one hand and giving it back with another, yet the Bill will make that process more likely and will apply it to lower income levels.
The Bill provides for a ¼ per cent. increase to cover the extra people coming into benefit during 1981–82. So far as I can make out, the largest number of extra people will be among the unemployed. The Government's advice to the Government Actuary, published in the report, is that average unemployment during 1981–82 will be 600,000 more than in 1980–81. In other words, if the Government have predicted matters correctly, those are the assumptions on which we should work. They are proudly saying that their policies will deliberately increase unemployment by 600,000. It is that for which the Government should be most criticised.
My constituents have suffered a great deal over the last six months from the Government's deliberate policy of creating an industrial wasteland. Stockport has worked hard for most of this century to remove its dependence on declining textile and hatting industries and to get itself firmly into a wide range of engineering industries, which would avoid the town suffering recession and cuts. It has gone for high skills and diversification, yet the deliberate policy of the Government is bringing major devastation to the town.
I have a list here of about 20 firms which, in less than three months, have all had significant redundancies—Scraggs, Abbey Electronics, Crownflex, Bowbros, British Metal Crates, Parkside Dies, TPT, H. Parkes and Nephew, Peak Trailers, Bolton's Superheater and Pipe Works, Johnson Machinery, Huntfield Engineering, Adamson Containers, Mullard, Bowater, Fairey Engineering, Viking Engineering, CPA and Edward Wilcox. There are many more. That increasing unemployment has been inflicted on my constituents and they are also asked to pay more for the privilege of having those extra unemployed.
The Government should learn from their own Actuary's report and work out the cost of the unemployment that they are creating. The Government Actuary says that every 100,000 unemployed cost £205 million, or just over £2,050 per person. On top of the lost taxes, that means that the Government have a considerable amount to spend which they could use to try to save jobs. Instead of increasing charges by ¼ per cent., the Government should be considering seriously measures to save jobs in areas such as mine. They should not accept that in 1981–82 the average level of unemployment will be 2,300,000.
I turn to the extra ¼ per cent. for the National Health Service. I would normally welcome that in principle. I should welcome it more enthusiastically if there were to be an improvement in the NHS. In my constituency there are major areas of the Health Service that are totally inadequate, especially provision for the elderly and for psychiatric patients.
There will be resentment because charges are being increased and yet there is to be no more money for the Health Service. It is another way of increasing poll taxation and making taxation more regressive.
There is another ½ per cent. provision merely to reduce the Treasury contribution. The Government are moving from slightly more progressive taxation methods to an


especially regressive method. On what basis did the Treasury suddenly pluck out 14½ per cent.? Had that anything to do with national insurance principles? I can see no evidence of that. The Treasury was merely trying to balance its books.
It is clear that the Government have misled the House when it comes to the bands. Whatever is said about the Chancellor of the Exchequer's statement, in choosing the upper limit of the bands for the increase and in going for £200 as the upper limit rather than £190 and some pence the Government are changing their policy. The right hon. and learned Gentleman's statement contained no explanation. As a matter of principle, I do not object to the change that the Government propose. I can see many arguments for abolishing the £200 limit. However, the Chancellor should have told the House of the direction in which he was moving. He should not have tried to mislead the House and the country by suggesting that his measures would have no impact on employers' contributions. It seems clear that in that area the right hon. and learned Gentleman misled the House.
If the Chancellor abolished the upper limit, he could raise enough money to move the long-term unemployed from the lower rate that they now suffer to the higher rates—to a minimum standard of living. If I can overcome the difficulty of framing and introducing amendments on account of the money resolution, I shall attempt by way of amendments to abolish the upper limit when we debate the Bill in Committee on Thursday.
What are the Government's intentions on sick pay? The Government's scheme is designed to transfer liability to the employer for the first eight weeks of sickness benefit. What effect will that have on national insurance contributions? There should be a clear statement now.
The Bill has to be taken in conjunction with all the areas in which the Government have been cutting back benefits. They have removed the linkage between pensions and earnings. That has resulted in a major reduction in what pensioners could have expected if the old legislation had been allowed to continue. By the pretence of deemed taxation, the Government have cut unemployment benefit, invalidity benefit, sickness benefit and industrial injury benefit. They are phasing out the earnings-related benefit. The payment of benefits took place two weeks late this year.
The general insurance principle is that the more we pay as we go, the more benefits we shall receive when we need them. The Government's motto is "Pay more and receive less in benefits". That is why the Bill should be opposed today and throughout all its stages.

Mr. Matthew Parris: I listened carefully to the hon. Member for Stockport, North (Mr. Bennett). He made a debating point when he said that he did not suppose that my right hon. Friend received many letters or postcards asking that employees' contributions should be increased. None of us would expect my right hon. Friend to receive that message. Many of us would expect letters from the public to my right hon. Friend asking him to maintain the present level of benefits if possible. Of course, charges have to be levied to maintain he level of benefits.
The hon. Gentleman argued that in Stockport, North there is a need for Government money to be spent on unemployment. I am sure that most of us would agree with

that. This measure will take a small part of the burden off the Treasury and in that way it will allow the Government to put more into schemes such as the youth opportunities programme and the temporary employment subsidy. Those measures do not solve the problems but they help in areas such as Stockport, North and Derbyshire, West.
I agreed with much of the speech of my hon. Friend the Member for Somerset, North (Mr. Dean). I was interested in the article that he quoted from Time about the increasing difficulty in maintaining the level of social provision that we now all expect on the resources now available to us. Does not that argument lead to a discussion on whether we can maintain social provision at its present level rather than to a discussion on whether it is right to raise taxes and insurance contributions? That is perhaps an argument that it will be more appropriate to take up when we debate the 1 per cent. cut in old-age pensions that is being planned.
My hon. Friend argued that this measure strengthens the insurance principle in the national insurance scheme. My right hon. Friend the Secretary of State and my hon. Friend feel that the Bill reinforces, or does not do violence to, the insurance principle, which they both support. The right hon. Member for Salford, West (Mr. Orme) feels that the Bill does some damage to the insurance principle, which he supports. I have a third permutation of those views. I agree with the right hon. Gentleman that the Bill does some damage to the principle. However, I am increasingly sceptical about the value of the principle. For that reason I welcome the Bill.
My right hon. Friend argued that the Bill somewhat reduces the contribution that the Treasury has to make and that in that way it reinforces the insurance principle. That is an argument that will serve, but it is rather a dangerous one. The time may come when my right hon. Friend wants again to increase the contribution that the Treasury has to make. The time may come when unemployment is so low that there is a small surplus in the national insurance fund and we are able to cream it off to put it, for example, into other areas of social spending. In either event, that action would be said to weaken rather than strengthen the insurance principle.
For as long as we adhere to the insurance principle but merely pay lip service to it, our real motivation will have little to do with the principle. My right hon. Friend will have to get used to the principle being thrown across at him from the Opposition Benches as part of the argument against the measures that he wants to take.
The Bill is consistent with the insurance principle. In any event, it does not do violence to it. The principle is supposed to be central to the scheme. The timing and magnitude of these changes seem to indicate that the principle has played only a small part in the introduction of the scheme. It seems that the Government are proposing the measures contained in the Bill because they need the money. I agree that they need the money. I agree that it must be found somewhere. I agree that this is a reasonable place to find it because employees' contributions are not levied on the least fortunate in society. It is therefore, in present circumstances, a reasonable measure to take. That, for me, is sufficient argument for taking it.
We should look generally at the operation of the insurance principle in our national insurance scheme. It never was a proper insurance scheme. A proper insurance scheme is voluntarily entered into and premiums depend on risk. Half the purpose of our national insurance scheme is to cater for areas that private insurance schemes would


not reach. There is an element of wealth distribution in the scheme, because good risks subsidise bad. The scheme also enjoys a measure of support from general tax revenue, which is as it should be. However, it is not an insurance scheme.
My right hon. Friend's duty—and his stewardship of the DHSS suggests that he sees it in the same way—is to assess genuine need and meet it so far as resources allow. The balancing of accounts in his Department is secondary to that. His predecessors have seen the matter in the same way. For that reason, maternity and invalidity pensions have come outside the insurance principle and only a small proportion of the National Health Service is funded from within it.
Unemployment benefit and retirement pensions remain within the principle, and that allows the Government to refuse benefit, for instance, to unemployed school leavers because they have not paid contributions. It also allows the Government to refuse it to the long-term unemployed, apart from supplementary benefit, and retired wives who have not contributed in their own right.
However, rather less than generally supposed of the money refused is money saved. Supplementary benefit is claimed instead, and that is a costly, cumbersome and demeaning way to help people. I do not like it. I should like the Government to consider other means by which people entitled to help can receive it.
There are arguments for the groups that I have mentioned being excluded from the benefits of contributory pensions. Those arguments should be re-examined. They are not all very strong. The argument that those groups have not contributed to the pension is the weakest of all.
In a rough and ready way, the insurance principle has served to explain and justify DHSS practice in the past, but decreasingly is it the motivating force behind social policy. The Bill makes that especially clear. Paying lip service to the principle will become increasingly inconvenient to Ministers of either party. One day it may prevent my right hon. Friend from taking action that he should take, which will be the wrong time to jettison the principle. People may then feel that principles serve Ministers instead of the other way round.
I support the measure, but I ask my right hon. Friend whether he will instruct his Department to prepare a paper — which I should be interested to see—assessing the present status and future prospects of the insurance principle in social policy.

Mr. Clement Freud: The hon. Member for Derbyshire, West (Mr. Parris) appeared to welcome the Bill as a means of raising money from the more fortunate in society. I oppose the Bill, not only because I sit on the Opposition Benches but because it dangerously narrows the gap between the low paid and those receiving unemployment benefit. The Conservatives' election promises, so carefully presented to the nation by their public relations consultants, said that they would not do that. On the contrary, they promised to widen the gap between the income of those who had a job and those in receipt of benefits.
I am saddened by the Government's failure to do anything about those who are really low paid. The Eastern

Daily Press, my local national newspaper, carried an advertisement from Norfolk for a full-time coypu operative to control the vermin in East Anglia. The wage offered was £56 for a 40-hour week, and the Bill, which will doubtless be enacted with the Government's majority, means that the new contributions will be paid by the man who obtains that job, even on that minimal sum. A man blessed with "the dignity of work" and in full-time employment is likely to receive supplementary benefit, rate and rent rebates and free school meals for his children.
The Bill seeks to find £973 million from employers and just over £1 billion from employees, which equals about 1½ on the standard rate of tax. I believe that the Government have considered the alternatives and decided that fewer hon. Members would be in the House, fewer people would complain and fewer editorials would berate the Government for a U-turn if, instead of putting an additional 1½p on the standard rate of tax, they placed the burden on the DHSS. I hope that they will find that they are wrong.
The Bill is a good example of how the national insurance fund is misused. In a New Society article, Professor Metcalf of the University of Kent said of the DHSS;
about the only effective role it has currently is that of Treasury lapdog — making its revenue-raising function so much easier…the DHSS is no longer running an insurance system, but has opened a bucket shop for the Treasury.
I have some sympathy with that view.
The hon. Member for Somerset, North (Mr. Dean) quoted purple prose from Time magazine. I shall quote some unpurple prose from The Times today. It takes a constructive look at what the Bill is seeking to do instead of talking ephemerally about castles in the air. It states:
Those effects are the opposite of the Government's declared aims of removing this incentive.
The changes mean that 50,000 of the lowest paid will have their marginal tax rate increased by 6·25 per cent. next April compared with their position before the Budget.
Those earning £40 a week will be able to keep only 62·25p of every extra pound they earn. On earnings of £500 a week high earners will be able to keep 40p of every extra pound, compared with 17p before last year's Budget.
In addition 90,000 families receiving family income supplement and other means-tested benefits will have an effective marginal tax rate close to 100 per cent.
Besides losing 37·75p in a tax in national insurance in every extra £1 earned, they will also lose some or all of their benefits.
The Secretary of State's alarm about the social security budget is vastly exaggerated. The percentage of GDP taken by the Government for total expenditure is less than it was five years ago. The social security benefits are a transfer of income and make no claim on resources. Half of social security expenditure is on national insurance benefits, which have been funded as to 82 per cent. by earnings-related contributions from employees and employers. The Secretary of State really "doth protest too much."
There is a strong argument for saying that national insurance benefits funded in this way should not be regarded as public expenditure, except for the decreasing 18 per cent. Treasury supplement. But the upper limit has been raised more than necessary to take account of increases in the basic pension. That puts an additional burden on employees at a time of acute economic crisis.
I should like the Minister to bear in mind in his reply the contention that has been made in newspapers, and in letters to me and to many hon. Members, that people who fall between the old and the new higher limits get a caning


which is totally undeserved I am sure that the Minister will agree that it is undeserved. But, when there are gaps on either side, it is wrong that one section of society should suffer more than the others.

Mr. Peter Bottomley: I hope that the hon. Gentleman will not take my remark as a debating point, but I should be interested to know whether he thinks that there should be an upper limit or whether he prefers the existing system where, once a person reaches a certain level of earnings, his marginal loss of income is reduced—in other words, he keeps more of his money when he gets above a higher limit.

Mr. Freud: Many of my political feelings lead me to believe that the upper limit should be scrapped, but I agree that the only way in which we shall keep people in this country, and the only way in which we shall get people to work harder, is to provide a real incentive. I have often toyed with the idea of recommending that there should be a final sum beyond which no one pays any tax It should be enormously high—£70,000, £80,000 or £100,000 a year—and, as a reward for having achieved that, in earned income on which tax has been paid anything above it should be free from tax. That would be an extraordinarily effective way to attract the real high fliers to this country, and it would cost us very little.
We have heard the alternatives from the Secretary of State—that the Bill is necessary because there must be a reduction in services or there will be higher contributions. My right hon. and hon. Friends and I are totally in favour of higher contributions. Our argument is with the equity of the legislation. We feel that in many ways this is yet another measure that has been rushed through without sufficient careful thought.
We shall oppose the Bill because a large sum—£406 million—is being transferred from general taxation to national insurance contributions, from money that takes due account of a man's wealth to an across-the-board, sweeping decision that take account of nothing. It ignores the family responsibilities and the social needs. It falls on the breadwinner of a large family just as heavily as it falls on a young single man living with his family. Insurance contributions were never intended to be so heavy an item in the weekly deductions from pay.
This measure has been described as a large rise, put through as a sneaky alternative to raising income tax. My objections are that people are suffering disproportionately to their income and that it narrows the gap that the Government set themselves to widen—the gap between earned income and social security.

Mr. James Hill: I apologise to my right hon. Friend the Secretary of State for not being present at the beginning of the debate. I was travelling from my constituency, having attended a meeting organised by the Transport and General Workers Union for the young unemployed in Southampton. Consequently, I arrived here in a subdued state of mind, and I was met by a subdued debate in the Chamber.
No matter what it is called, this is an increase, perhaps a minor increase in some cases, in the taxation system. It is minor because the employee's contribution will rise from only 6·75 per cent. to 7·75 per cent. The employers, who were on automatic indexation, have little to grumble

about, because they have a cut-off point. I enjoy the cutoff point at £200, and sometimes I have sympathy with the view that the cut-off point is unfairly low. Although we wish to encourage our entrepreneurs, there is a duty on all citizens who enjoy a good and comfortable way of life towards those who have a less comfortable life, and perhaps in the future the top rate should be raised to a more realistic figure.
Having said that, many members of the public and many hon. Members often confuse the objectives of the insurance fund. They think that it supports the National Health Service. It supports it only in a minor way, this year to the tune of only £700 million. The contributions are extremely high in total—£16,145 million—of which there seems to be a small surplus each year. The surplus is small compared to the grand total, but nevertheless it amounted to £682 million this year. We are all grateful for that, because for all taxpayers and for all people who pay any form of contribution it must mean a reduction of the public sector borrowing requirement.
One of the anomalies that I should like to mention, having just attended a meeting of unemployed youth, is that young people are unable to claim supplementary benefit at the age of 18. They are completely dependent upon their parents. It was mentioned at the meeting that at the age of 18 young persons can join the Army, the Navy or the Air Force, they have the ability to vote, and they think of themselves as adults, but they cannot claim supplementary benefit. I am sure that that is being examined. Perhaps the youngsters gave me a distorted view, and I hope that my right hon. Friend the Minister will be able to clarify that in his reply.

Mr. Frank Field: I am slightly confused by the point that the hon. Gentleman is making. A young person is able to draw supplementary benefit at the age of 18. He can do so at an earlier age, but, as a result of a measure introduced by this Government, he cannot do so immediately after leaving school. Was the hon. Gentleman making a plea that young people who have finished their education and who, through no fault of their own, cannot get jobs should have the immediate right to national insurance unemployment benefit? There would be considerable support on both sides of the House for such a move.

Mr. Hill: I thank the hon. Gentleman for clarifying the point. Perhaps I did not put it clearly enough, or perhaps I put it in a way which could be easily misunderstood. The hon. Gentleman is perfectly correct. I was making the point that someone can leave school at 17 and still be unemployed at 18 and unable to get the benefits of which we are speaking. Indeed, at the meeting to which I have referred there were several adults, as I would call them—people who had left school at 16 and who were still unemployed at 18. This state of affairs spans both Labour and Conservative Governments and I do not think that it is a political point to make.
Unemployment has not been growing simply in the last few months; it has been with us for some considerable time. We are all aware that the two groups hurt most by unemployment are the ethnic group and the young of all racial categories. I know that my right hon. Friend the Secretary of State for Employment, with his usual flair for putting his finger on the root cause, will use the £250 million that has been bespoken for youth employment. He


would be well advised to attend some of the meetings of the unemployed youth so that he, like me, can see the real problems in the raw. But I am sure that he is doing that.
The whole Budget will be terribly distorted if we do not hold unemployment to 2·3 million. It would be a tragedy for all political parties if the world recession, the lack of markets overseas, the rate of the pound, high interest charges — they are still fairly high — and lack of industrial growth were to mean that a figure of 2·3 million unemployed could not be contained in the year 1981–82. The Government are doing their very best in this matter, but we are likely to suffer still more from world recession. The recession may be almost stationary for the next six months, but if it moves through like a typhoon we all hope that we shall be in the heart of the storm and that industry will be in a position to take on at least half a million of the unemployed, particularly the young.

Mr. Andrew F. Bennett: No doubt the hon. Gentleman, in preparing for the debate, will have looked carefully at the Government Actuary's report on the Bill. If so, he will have seen that the Government are deliberately assuming that there will be an average of 2·3 million unemployed for the whole of the period 1981–82. Surely, that is going much higher than the figure that the hon. Gentleman is pleading with the Government to contain.

Mr. Hill: The report of the Government Actuary, on page 6, shows that he is working towards the figure of 2·3 million. I should be distressed if the figure were to go that high, but projections of figures and statistics are so liable to distortion in the very short term that it would need only the slightest improvement in our trading markets for 2·3 million not to be a realistic figure for the period 1981–82. I know that all Ministers are extremely worried about this problem, and it does not help if certain Shadow Ministers use it as some sort of political bludgeon against the Government.
I do not want to go into too much controversy, but it was the Chancellor of the Exchequer in the Labour Government who introduced the 3½ per cent. national insurance surcharge, which now costs British industry about £3½ billion per year. I do not think that we can tolerate crocodile tears from the Chancellor of the Exchequer in the previous Government. Indeed, he got it consecutively wrong, and we are now in the difficult position of having to find about £16 billion to pay even the retirement pensions, widows' pensions, unemployment benefits, and so on. We need £16 billion not only to fulfil the obligations of the last Labour Chancellor but to pay the indexation that is written into the agreements.
I am a little worried about how the employers will react to their surcharge. The employers in general have accepted the argument that it is automatic and that it is geared to the last measure on the subject. It is something that I pay, as do most of us here. We were worried at the time that it was not sufficiently well explained. I have told many employers that it is an automatic procedure and that the Chancellor did not at any time mislead the employers. The Chancellor certainly did not grossly mislead the Commons, as an article in The Guardian said on 26 November. He is the last man who would grossly mislead the House. Nevertheless, it has to be said that the new cost

to the employer will be in the region of £386 million per annum. Perhaps the Minister will correct that figure if it is wrong.
The employers are paying their way. The difficulty is that they will say "We are under stress and are finding it more and more difficult to make ends meet. Is not this another form of taxation?" It has never been anything but that, right from the beginning. From the first national insurance scheme that was ever produced, it has been a form of taxation. To the person who receives the pay packet, it is all the same whether the figure is entered as pension contribution, income tax, corporation tax or national insurance payment. What matters at the end of the day is the amount that is left for the person to live on.
It is a very minor increase, and I know that the economists within the Department could make a case for saying that it is even less this year in percentage terms than it was last year. The economists have said that it is an increase of only 8·3 per cent. to the employers and that, with prices going up at about 11 per cent., it should have been around 11 per cent. I do not think that I could sell that sort of argument, although it is a perfectly logical accountancy argument.
When the Government next come to the point of explaining the employees' and employers' contributions, I hope that they will put the two items together and make one statement about them, so that there will be no chance of Back Benchers making any mistake or of the media getting into such a tizzy. I hope that the Government will not provide the opportunity for former Chancellors of the Exchequer to try to score points in relation to a perfectly simple updating of the employers' contribution
My right hon. Friend should realise that he has many friends on the Government Back Benches who support him in what he is trying to do. However, I hope that he will explain the subject more plainly on the day, so that we may give the Government even more support in our constituencies.

Mr. Frank Field: I should like to make two points, but first I appeal to Conservative Members to join us in the Lobby tonight.
The measures in the Bill and the other measures which the Department of Health and Social Security has already piloted through the House are putting at risk the Government's economic strategy. For that reason alone, we are entitled to appeal for votes. Secondly, despite what the Secretary of State said, the Bill is an attack on the insurance principle—a matter which I want to discuss in some detail.
One of the advantages of speaking in a debate in which many hon. Members wish to speak but have not been brought in by the Whips or other forces, is that there is the opportunity to comment on what has already been said. I shall start by developing the argument that the hon. Member for Somerset, North (Mr. Dean) presented. The hon. Gentleman read some very important passages from the Daily Mail and Time magazine. In my opinion, he not only posed the wrong questions but drew the wrong answers from those questions. The questions that he posed were the old questions that we expect from the Treasury Bench: is the burden now too great to carry? Are we in danger of killing the golden goose? In my opinion, those are not relevant questions.
There is an important issue that hon. Members on both sides of the House should consider. It is relevant to the debate, particularly at a time when it looks as though we shall not be returning to a period of even the sluggish growth rate that we expected in the post-war period. The central question to which we should address our attention today and on other occasions is how to get the population to spread 40 years' earnings over a lifetime which, for many people, now lasts over 80 years. In order to answer that question, we must decide to what extent the Bill helps as to present that question and get a sensible answer to it. If we support a measure that asks for increased contributions and lessens the benefits to be gained in return For those contributions, we shall not get that major debate on how both political parties persuade people to spread their earnings over a lifetime.
A well-attended debate allows hon. Members to comment on the Secretary of State's contribution. I wish that he had been honest about the mess that the Chancellor of the Exchequer made in making the announcement to the House about the increased employers' contributions. I know a fair amount about the national insurance scheme and how it works, but even I mistook what the Chancellor said. The key part of his statement was that the burden on employers should not be increased and, therefore, that the rate had not gone up.
My guess is that even the right hon. and learned Gentleman did not know how the insurance scheme contributions worked in detail for employers and that, in desperately trying to find sums to contribute towards his £4 billion target for cuts in public expenditure, an increase in national insurance contributions was proposed for employees. The Treasury presented him with the gross figures of the effect on revenue but did not explain in detail to him that the burden on employers would be raised because of the change in the ceiling. How much more refreshing and honest it would have been if the Secretary of State had admitted that.
The Secretary of State's argument falls to the ground. If, as he says, everyone, bar the Shadow spokesman for health and social security, knew that employers' contributions were being increased—in amount rather than in the actual percentage rate — why was it necessary for a written question to be planted the following day that could make clear what the increase was?

Mr. Patrick Jenkin: The normal practice, which has been followed year after year at precisely this time of the year, is to announce the rates of contribution and the levels of the lower and upper earnings limits. That is exactly what was done this year. There was no question of a specially planted question after the Chancellor's statement on 24 November. It was the normal procedure, carried out in the normal way. I hope that the hon. Gentleman will accept that.

Mr. Field: The Secretary of State is at a disadvantage, because he was talking when I first raised this topic. The right hon. Gentleman is confusing two points. One is, was the normal procedure followed this year as it was last year? The answer is, undoubtedly, that the normal procedure was followed. But the totally separate question is whether the Chancellor, most of the Cabinet or anyone else in the House of Commons who heard the statement was aware that the money size of the employers' contribution would increase, given that the Chancellor said that the rate of

contribution would not increase. The answer to that question is clearly "No" — hence the question on the following day to clear up the difficulty.
There is a continual attempt by the Government to try to disguise what happened. Given that one sometimes believes in the cock-up theory of history rather than any other kind of history, it would have been refreshing for the Government to have told us that that was what did happen but that perhaps, on reflection, they would rather not have made that move.
I turn to the two matters that I intend to raise in my contribution to today's debate. The first is the argument that this measure is destroying the Government's main economic strategy. The second is that, despite what has been said, the measure is undermining the contributory principle in an important way, which will have long-term repercussions.
The Government's economic strategy, if I correctly understand it in the way that the Chief Secretary has so often explained it to the House and elsewhere, is as follows. The Government have a target of controlling the increase in the money supply in the medium term, and they have the immediate objective of decreasing the public sector borrowing requirement as a proportion of gross domestic product. This measure, together with the other measures that the Secretary of State has pushed through the House, makes it more difficult for the Chancellor of the Exchequer and other members of the Government to keep on an even keel in relation to that policy. I should like to take a little time to explain my reasons for saying that.
First, we have had a series of measures that have cut not only the rate of benefit paid to national insurance beneficiaries but the benefits themselves. For example, this year we are experiencing the first stage in phasing out the earnings-related supplement.
The more the Government pursue this policy, the more people will be pushed on to supplementary benefit. But, as we know from this debate, the more we keep people within the national insurance scheme, the more we must not raise contributions to pay benefits. But, likewise, the more we keep people within the national insurance scheme, the less the Government will have to increase traditional taxation or borrowing.
The Government are set on moving people from insurance benefits to means-tested supplementary benefits. The more that they are successful in that objective, the greater will be the burden on either taxation or Government borrowing. Therefore, we must view this measure in the wider context of the Government's aim of controlling the growth of the money supply in the medium term and of reducing the public sector borrowing requirement in the immediate future. This measure will make it more difficult to achieve that goal.
I hope that the Government will tell us what thought they have given to raising the ceiling so that we can increase the rates of benefit and the coverage of national insurance benefits and thereby keep people from drawing means-tested supplementary benefits. The more successful they are in achieving that objective, the greater will be their success in reducing either traditional taxation or the public sector borrowing requirement.
This measure hits the central plank of the Government's economic policy. For that reason alone, we should command support from many Conservative Members when we divide the House.
Secondly, I want to comment on the way that the revenue is to be raised. The hon. Member for Isle of Ely (Mr. Freud) made a valid point when making a distinction between whether the Opposition objected to the raising of contributions or to the means by which the contributions were to be raised. That is an important distinction and I shall come back to it later.
The starting point for this part of the debate is what Beveridge originally envisaged for the national insurance scheme. I was interested in the comments made by the hon. Member for Derbyshire, West (Mr. Parris) in this respect. It seems to me that Beveridge was slightly more of a collectivist than the hon. Gentleman, in that he did not view the national insurance scheme in the same way as we view a private insurance scheme. It was a way of enabling working people in the main to undertake collective insurance for a whole group. The rules of the scheme were, therefore, different from what would obtain in a private insurance scheme.
Beveridge was operating against the background of the 1930s, when every household had a real fear and hatred of the means test. Consequently, he plumped for an insurance-based scheme. He believed that in that way we could guarantee that people would feel that they had earned the right to benefit. But Beveridge was also aware that by opting for an insurance-based scheme, particularly with the poll tax which paid for those insurance benefits, only a limited amount of the fund raising for the national insurance scheme could be put into the poll tax.
For the first and last time, I should like to cross swords with my right hon. Friend the Member for Salford, West (Mr. Orme). I think that he underestimated the contribution that Beveridge envisaged coming from the Exchequer and overestimated the amount coming from employees and employers. In the Beveridge report there is no clear statement of the projections for the national insurance fund in the post-war period. One has to turn to the White Paper on the report to find the Government's response to those proposals and their commitment to the Exchequer's contribution to the insurance fund.
In 1945, the Government envisaged that the Exchequer's contribution to the national insurance fund should be over 54 per cent. In 1965, the last projection in the 1944 White Paper, the Exchequer's contribution was seen as being 67 per cent. The Bill will reduce the Exchequer's contribution to 14 per cent. It is the change from raising it through taxation, which one would hope would be progressive, to a flat-rate poll tax to which many of us object.

Mr. Peter Bottomley: As this is a significant debate, will the hon. Gentleman reconsider his use of the phrase "flat-rate poll tax"? It may be a single rate, but it is not a flat rate, because it is earnings related.

Mr. Field: I accept that point. However, throughout the debate there has been confusion between the amount paid as a set contribution in money terms and the proportion of earnings that is paid into the national insurance fund.
The main thrust of my argument was that we could support the national insurance scheme only if we kept the poll tax, or whatever one wishes to call it, as a very small part of the total amount of revenue raised for the entire scheme. We have moved steadily away from that position.
Governments of both parties have allowed the Exchequer's contribution to fall. Then the Macmillan Conservative Government made a major change when introducing the graduated pension scheme in 1961 by, for the first time, not matching earnings-related contributions to the Exchequer's contribution. The Bill represents a third move in the undermining of the contributory principle by lowering the Exchequer's contribution to 14 per cent.

Mr. Parris: What is the insurance principle?

Mr. Field: As we have a few minutes to spare, I shall digress on the insurance principle. I was trying to explain that the hon. Gentleman got it wrong earlier when he confused how private and State insurance schemes would operate. Beveridge set on the idea of an insurance scheme partly because he wished contributors to feel that the benefits were theirs as of right as citizens, not as in a private insurance scheme from which one can draw benefits, first, if one has made contributions and, secondly, on an actuarial base.
What I am saying in answer to that interesting intervention is that from the word "go" the insurance principle was a fiction. It was an important fiction for Beveridge to put forward because it was a way of convincing the vast majority of people that this would signal the end of means-tested assistance. It was not envisaged that people would benefit only if they had made the necessary contributions on an actuarial base.
One of the problems that we face stems from that fiction. If we believe the myth that we have an insurance-based scheme, we start to exclude people from that scheme because they do not have adequate insurance records. That happened at the start when Beveridge excluded the vast majority of single-parent families. Obviously, he could not foresee that the advance in medical knowledge would enable many disabled people to survive not only birth but well into old age. Such people were obviously excluded, because, by definition, they were part of the labour market and could not make contributions.
In many ways, the hon. Gentleman's intervention is valid. We have none of the advantages of an insurance scheme, but we have all the disadvantages of believing that we have an insurance scheme because we have based eligibility on the fiction of contributions. We have also witnessed Governments changing the level of benefits according to the size of the scheme.
It is dangerous to believe that if we could build up a surplus in the national insurance scheme it would allow Governments to increase the rates of benefit. History teaches that when we build up a surplus in the national insurance fund Governments decide to decrease the Exchequer's contribution to the fund. That is not a path that I wish to follow.
Before that interesting intervention, which involved what was and what was not an insurance fund, I had pointed out that on three occasions Governments had undermined their contributions to the scheme. During the post-war period Governments cut the size of their contributions. They did not back the graduated contributions with an Exchequer contribution. We are now faced with the Bill.
I have listened carefully to the debate, and it could be argued that both sides of the House have pleaded that the ceiling on contributions should be raised. The Government should consider what could be done with the additional


revenue. The Secretary of State said that such a move could not be contemplated because private pension arrangements were tied to the level of contributions and the rate of the State graduated pension scheme. On many occasions the Government have taught us that it is easy to tear up previous agreements. If it is right to raise contributions and to adjust the formula for pension calculations, the Government should do that.
The regressiveness of increasing contributions can be mitigated by lifting the ceiling for employees, if not for employers. The additional revenue could be used to raise the floor for contributions. If I lip-read correctly, the Secretary of State just said that that was not possible. The Government have taught us that more things can be legislated for than most of us had dreamed of before we came to the House. The Secretary of State should take courage. He should draw on some of the things that the Government have done. He should make the world as we would want to see it. He should not consider previous measures as if they were laws of God that cannot be Changed.
In Committee I shall again plead that the Secretary of State should not increase the employers' contribution by raising the ceiling but should raise it for employees. He should use that revenue to raise the floor of the contribution at least to the level of supplementary benefit. In that way, nobody would contribute to the national insurance scheme from the part of his wages that was below the supplementary benefit poverty level.
The Low Pay Unit provided hon. Members with a brief. I am grateful to it for that. However, I take issue with the Low Pay Unit on one small point. It rightly draws our attention to the difference in contributions that two groups of workers will make under the arrangements proposed in the Bill. It draws our attention to the contributions made by those who have contracted out of the scheme compared with those made by people who have contracted into the State pension scheme. It pleads that, as those who have contracted out can set their increased contributions against tax, the same privilege should be allowed to those who are making national insurance contributions. I hope that the Government will not go down that road. I hope also that a future Labour Government will never go down such a road.

Mr. Patrick Jenkin: The hon. Gentleman said that those who have contracted out can set their increased contributions against tax. I think that he meant that they can set their contributions to private pension schemes against tax. Under the Bill, none of the contributions— increased or otherwise—can be set against tax.

Mr. Field: I am grateful to the Secretary of state for that intervention. I was trying to point out that there was an increase in contributions to the national insurance fund. If those who have contracted out make a similar increased payment to their private funds, they can offset that amount against tax. Even so, the House should not accept the Low Pay Unit's proposal.
The House must come to terms with the massive growth in tax allowances. We must control that loss of expenditure and not increase the drain on the Exchequer by granting yet more privileges that can be set against tax. It is amazing that the tax-benefit Welfare State has grown in such a way that only 45 per cent. of personal income if set against tax. We should debate how to bring more

income into the tax net and thereby reduce the marginal and average rates of tax for individual taxpayers. We should not decrease the amount of income that is tax-free and thereby push up everybody's average and marginal rate of tax.
Within the next few decades all parties will have to face the problems caused when major pension companies become insolvent. Those companies will then be paying out pensions at a faster rate than that at which they receive contributions and investment income. The "British Leylands" of the next 20 years will be private pension funds. We must take a cool look at the problems that we are building up for future taxpayers. We are making it advantageous for individual taxpayers to sink some of their money into private pension funds. At the same time, we are giving them tax concessions for doing so. In addition, we are increasing the tax burden for the rest of the taxpaying community and leaving that community with some hefty bills, because private pension funds will run into serious financial problems within 10 or 15 years. At that time, the balance between receiving contributions and paying out pensions will have shifted, and increasingly private pension funds will be paying out an ever-increasing proportion of their income in pensions while at the same time receiving proportionately less in contributions.
I have sought to make two brief points. The first is that the Bill, coupled with the other measures that the DHSS has presented, will sabotage the Government's main economic strategy. That is a good enough reason to ask for support in the Lobby tonight. Secondly, the measure asks taxpayers to contribute more for less. During the next 10 to 15 years, parties will have to face the essential problem of how to persuade the electorate to spread the earnings that they have gained over 40 years over a lifetime of 80 years. That argument will never be heard if measures are brought before the House which seek to increase contributions and cut benefits. For those two reasons, I appeal to hon. Members to reject the measure in the Lobby tonight.

Mr. Eldon Griffiths: The House will always listen to the hon. Member for Birkenhead (Mr. Field) when he speaks on this subject. He has spent a lifetime studying it. I was impressed by what he said about the possibility of many large private pension funds being forced to pay out, notionally perhaps, more than they had taken in. In part, that would reflect the fact that people live longer. I hope that the hon. Gentleman will agree with me when I say that if he fears such a possibility he will want, above all else, to reduce inflation. I believe that this measure is designed as part of a strategy to get down the level of inflation. Therefore, on the hon. Gentleman's own argument he ought to support it.
At the beginning, I should like to dispose of some of what I can only call the flim-flam. The hon. Member for Isle of Ely (Mr. Freud) talked about coypu. I am probably one of the few people in this House who have actually exterminated a coypu. I find it very hard to credit that somehow or other in Norfolk there are at present significant numbers of people who are being taken on for full-time jobs—whether at £56 a week, as the hon. Member said, or some other figure—to get rid of the coypu herd. That is not exactly the subject of the debate—

Mr. Deputy Speaker (Mr. Bernard Weatherill): I was about to make that very point. Perhaps we should not pursue coypu.

Mr. Griffiths: As I have said, Mr. Deputy Speaker, I was very anxious simply to dispose of the flim-flam. That was the "flim". I come to the flam.
The flam is the noise that has arisen from the Labour Party about the alleged misleading of the House by my right hon. and learned Friend the Chancellor of the Exchequer. I do not think that any of those present this afternoon who have studied this matter will have pursued that accusation seriously. However, it is just worth recording that when I heard this charge against my right hon. and learned Friend I looked up the record, and I discovered four things. The first is that when earnings limits were altered, every year under the Labour Government, there was no special statement by the then Chancellor of the Exchequer. It was indeed treated as a normal and uncontroversial procedure.
The second point is that the formula for increasing the earnings limit is laid down in, of all places, the Social Security Pensions Act 1975, the product of the Labour Party, so Labour Members can hardly complain about the particular procedure laid down in the Labour Government's Act being followed.
The third point is that when I began to concern myself about the impact of this additional impost on my constituents who are employees I discovered, historically, that the previous Government increased the upper earnings limit every year. In particular, I discovered that in April 1975 the upper earnings limit was £69 a week, and by April 1979 this had just on doubled to £135 a week. I accept the point about to be made by the right hon. Member for Norwich, North (Mr. Ennals) before he even makes it. The Labour Government altered it at both ends. None the less, for many of my constituents the reality is that they doubled the upper earnings limit.

Mr. Ennals: Earnings doubled.

Mr. Griffiths: So they still are.
Fourthly, I discovered that not only did the right hon. Member for Leeds, East (Mr. Healey) introduce the 3½ per cent. national insurance surchage—which, incidentally, costs industry £3,500 milllion a year; it was the right hon. Gentleman's measure—but he was a leading member of a Government who raised the employers' national insurance contribution rate from 8½ to 10 percent., costing employers a further £1,500 million each year. It may be that there will be some hon. Members — the hon. Member for Birkenhead, I suspect—who would support the philosophy behind many of those changes. However—I leave the flam alone now—I think that I have said sufficient to demonstrate that it was a piece of classical parliamentary humbug on the Opposition's part to lay those allegations against my right hon. and learned Friend.

Mr. J. W. Rooker: The hon. Gentleman has obviously done some homework. I have looked at the dates as well. Can he instance a single case in those four years when, on the day previous to the written answer, normally given in written form, about the change in contributions, there had been a mini-Budget from the Chancellor of the Exchequer?

Mr. Griffiths: I am always honest in these matters. I cannot give the hon. Gentleman a single answer, because

I have not looked that up. But that does not detract from my central point: that the record speaks for itself and that it was a piece of classical humbug. It was rather effectively done. I congratulate the Opposition on their sense of press manipulation.

Mr. Peter Bottomley: Surely, the point made by the hon. Member for Birmingham, Perry Barr (Mr. Rooker) works the other way. On none of the other occasions did a Labour Minister come to the House and say whether the rate percentage would change. At least we had the advantage before the written answer of hearing that the employers' rate would not be changing.

Mr. Griffiths: I am grateful, as always, to my hon. Friend for coming to my rescue—when I was not in great need.
I come to the substance of the Bill. I have asked myself three basic questions. The first is whether we need it. The second is whether the proportions are right as between employees and employers. The third question is: once we have the money, what will the Government use it for?
I start with the need. I say at once to my right hon. Friend the Secretary of State that I do not like any further additional impost on the workers that will serve in any way to discourage them from work. In stating that, I think I am stating what is common ground on the Conservative Benches. I do not like it, but I belibeve that it is, in all the circumstances, neccessary.
I went into some detail. I wanted to find out what we needed it for. I discovered that ¼> per cent. is reguired to keep the fund in balance. This reflects in part the substantial increase in much regretted unemployment. I hope that the Opposition, when they come to vote against the Bill tonight, will not be voting against the additional moneys that will be required to keep the unemployment insurance fund in balance.
For a party that has, quite rightly, concerned itself with the impact of unemployment, it would be very odd if Labour Members were to be thought tonight to be voting against the money to provide unemployment pay. When we hear the winding-up speech from the Opposition, I hope that we shall hear the hon. Gentleman extricate himself from the dilemma that tonight he will be advising his party to go into the Division Lobby to vote against a fund that will put the national insurance back into balance.
I am not one of those who believe that unemployment is a passing phenomenon and that within two or three years, or less, we shall find the graph turning down. I hope that that is so. I believe that with luck and good management we shall see a significant reduction in the very high levels of unemployment that exist today, and may be higher still in the months ahead, but I am sure that there are some structural reasons why high levels of unemployment will remain, not only in this country but in much of the industrialised world.
One of the reasons is international events, over which we have very little control. If Saudi Arabia collapses and there is a further transfer on a large scale of wealth from the Western nations to the Middle East, there can be no dodging the consequence: there will be a further recession in the West and there will be higher levels of unemployment.
Secondly, we are in the process of major structural change, and new industries based on cybernetics, chemistry and telecommunications are advancing. The


older labour-intensive industries are going into rapid decline. In this connection I declare an interest, for I am a director of a number of engineering companies.
Thirdly, I have no doubt that we are starting to pay some of the high price of a generation of low productivity. That low productivity is having the effect of making our goods uncompetitive. We are losing international markets and we are losing jobs.
For all these reasons, I do not believe that unemployment will start to recede just round the corner. We shall have to live with it and try to cope with some of the immense social and political consequences for most of this generation. I believe that that is common ground which it would be wise for the Labour Party to recognise. We are wrestling with it together.
So, on the first question, I believe that the new measure is necessary because of the ¼ per cent. that will go into keeping the unemployment fund in balance.
The second reason why we need the measure is that another ¼ per cent. is going into the health services. I congratulate my right hon. Friend the Secretary of State for Social Services on the fact that, during a period when all the pressures have been for substantial cuts in public expenditure, he has been able to keep the broad investment in health on an even footing—indeed, it is going up. But, of course, if we want to maintain or to improve the expenditure on the Health Service, the money has to be found. Once again, I put it straight to the Opposition. I hope that they will be able to demonstrate that, in voting against this measure, they are not voting against the ½ per cent. that will be used to maintain the health services over the coming year.
In my view, for reasons which the right hon. Member for Norwich, North knows better than probably anyone at present in the Chamber, the demand for expenditure, both public and private, in the Health Service will not decline. It has to rise very sharply, first, because of the large numbers of people who live longer, which is a welcome development; secondly, because of the increase in mental and geriatric problems; thirdly, because of the rapid advances in surgical techniques, notably in transplants and in prosthetics; and, fourthly, because of the exploding technology and high costs of modern medicines and drugs. For all these reasons, we shall have to find more money for the health services. Once again, this measure is a small contribution towards meeting that extra cost.
The third portion of this new impost that is needed is the ½ per cent. that will be used to reduce the Treasury supplement to the national insurance fund. As between the two sides of the House, that is probably the most contentious aspect of the Bill. I say at once that I am strongly in favour of it, because it is necessary to reduce the public sector borrowing requirement.
As a Government, we did not do well enough in our first 18 months in office to get a grip on public borrowing. Far too large a proportion of our taxes and contributions is being used to pay the interest on the previous Government's borrowing, and it is very much in the highest national interest that every effort be made to reduce the PSBR. I believe that the ½ per cent. that will be contributed from this source will help in that process, and therefore I am happy to support it.
I come to the concluding part of my remarks. Once the Government have got the money, for what exactly will they use it? I have indicated the three broad areas.
I was very impressed by much of the speech of the hon. Member for Birkenhead, and I hope that his cogent arguments will be dealt with. I am sure that he will forgive me if, in the interests of time, I do not develop them. I do not think that it is possible to put them more clearly than he did.
However, I hope that I might be permitted to put a démenti in the other direction. I remember Beveridge. It was a new light in the darkness. I speak as one who grew up in difficult circumstances in South Lancashire in the 1930s. To many of us who were serving in the Armed Forces, Beveridge was a new light of hope, and I was very glad to support it—indeed, it had all-party support. But I do not believe that Beveridge and those who supported him at that time would recognise the Welfare State as it is today. Without going into details, it is the most complicated, ramshackle and ineffective Welfare State that it is possible for man to devise.
A great many of those who need its help do not understand it. There is not an hon. Member of this House who does not at his Saturday morning surgeries have the difficult task of trying to explain to some of the neediest members of our society why they cannot have help as the Welfare State is organised. So, in this brief discussion of the national insurance contributions, I say that one development that I wish to see is a rapid advance in the Government's attempt to simplify and make more comprehensible the benefits paid by and the charges made for the Welfare State.
I have in my possession a document that I find of great value during my weekly surgeries. It is entitled "Which Benefit?", and it was published recently by the Department. It describes 60 ways of getting cash help, many of them provided under the terms of this and similar legislation. I leave it to the House to judge whether it is in every respect wise to push out official documents that will encourage more and more people to see whether they are getting every last penny to which they may be entitled. There are various views about that, and I leave it entirely to the House.

Mr. Bob Cryer: Members of Parliament do.

Mr. Griffiths: Does the hon. Gentleman wish to intervene?

Mr. Cryer: Yes. I find it very offensive that the hon. Member for Bury St. Edmunds (Mr. Griffiths), who is getting his Member's pay, pay for the directorships that he holds and Police Federation pay, should talk about people not receiving supplementary benefit or even information about their rights. As I understood him, that was what he was on about.

Mr. Griffiths: I do not propose to join the hon. Member for Keighley (Mr. Cryer) in the gutter. He has just slid into the House and got it not only wrong but rather nastily wrong. I was; saying no such thing. If the hon. Gentleman had been here a little longer, he would have realised that. My point is simple, and I shall illustrate it. We have an immensely complex and prodigiously expensive Welfare State, to which the Bill will make a further contribution. Far too often those in greatest need do not receive the necessary benefits, and those whose need is less receive benefits which they could do without.
I was driving along a lane in Suffolk recently when I came across a blind man who was walking a long way from


the village. It was cold and dark. I had a long talk with him and subsequently examined his situation. He is a man of courage. He worked on a farm for six years while he was blind, and during that time he earned £10,000, which is not very much. He managed to put aside something more than £1,000, which, together with some other savings and the fact that he is able to live with his mother, puts him just above the supplementary benefit level. Consequently, he is not eligible for a wide range of benefits that are paid to others who are manifestly better off than he is.
The problem of those who are just above the supplementary benefit level has been discussed frequently in the House. It is not what Beveridge intended. While that blind man and many others are denied the benefits that they need, others, whose need is less, continue to draw significant benefits from our Welfare State. I am thinking especially of those who are retired, sometimes on a decent occupational pension. In the case of women under the age of 60 and men under the age of 65, they claim unemployment benefit, to which the Bill will contribute. They go into the statistics. Quite frankly, I do not believe that it is right that people in that position should be able to receive benefits. If they do, for reasons of lack of cash the same amount of money is denied to those who need it.
Another group are the self-employed. I declare an interest here. I suppose that many hon. Members are self-employed in one sense. When they move from one job to another, as is the nature of their work—for example, a violin player in an orchestra or other self-employed people in the professions—during the interim period between their engagements they claim supplementary benefit and frequently receive it.
There are those who arrange their lives to qualify for benefit. I am not thinking of the poor or needy who do not understand the way that the system works. I am referring to those who study the matter carefully. An example is a young couple who marry while the husband is a student and the wife a school teacher. They study the system and realise that if they have their first child while the husband is still a student, to a considerable extent they can both live on social security for a couple of years. Of course, the wife has a mortgage and the usual commitments based on a not inconsiderable salary. They manage to live comfortably. They are proud of their achievement because they studied the system.
I need not go further. The House knows perfectly well that there are many who do not need help from the Welfare State but who regard it not as a necessity to prevent them from falling into poverty — which was Beveridge's original idea—but as a means of receiving a little bit on the side. It is a supplement to an income which, in many cases, is fairly adequate. One of the consequences is that much of the available resources is moving in the direction of those who plunder the system and, therefore, is not available for the poor in genuine need.
I support the measure, for the reasons that I have given. It would be valuable to know how the Government propose to reform the balance and thrust of the Welfare State so that more of the benefits go to those whose poverty is genuine and less to those who are using the system as a racket.

Mr. David Ennals: Before referring to what was said by the hon. Member for Bury St. Edmunds (Mr. Griffiths), I wish to apologise for having been out of the House for part of the debate. I shall be out of the Chamber for a further part of the debate because I am host to the United Nations High Commissioner for Refugees, who is visiting Britain.
I wish to follow the hon. Member for Bury St. Edmunds on a number of points, especially the last two. He said that it was not the job of Members of Parliament to explain entitlements to constituents. My hon. Friend the Member for Keighley (Mr. Cryer) intervened, and the hon. Gentleman said that he did not want to get into the gutter with him. I believe that one of the jobs of Members of Parliament is to ensure that constituents are informed of their rights under the Welfare State. What worries me more than the small number of people who may claim benefit to which they are not entitled is those who do not claim benefits to which they are entitled and which they very much need. If I misunderstood the hon. Gentleman, let him now intervene.

Mr. Eldon Griffiths: The right hon. Gentleman is courteous, as always. I did not say what he has suggested. I regularly explain the available benefits to people who do not understand the matter. If either the right hon. Gentleman or his hon. Friend the Member for Keighley (Mr. Cryer) are in doubt about the available benefits, I should be happy to give them a helping hand if they come to my surgery in Bury St. Edmunds.

Mr. Ennals: I have enough problems in my constituency, largely created by the Government. I shall not accept the hon. Gentleman's invitation. It may be that he was referring to the leaflet and saying that it was ill-advised to publish a leaflet about benefits and contributions just before the Government introduce legislation that changes the basis of contributions. If that is what the hon. Gentleman meant to say, I warmly support him.
The Bill has been introduced at great speed, and without adequate thought, to deal with a crisis. I shall deal with the flim-flams with which the hon. Gentleman began. I must not mention the "flim" because that was a coypu and I am not a coypu lover. On the "flam", the hon. Gentleman referred to what he thought was a public relations operation suggesting that the Chancellor of the Exchequer misled the House. I do not accuse the Chancellor of deliberately misleading the House. I am not sure that, when he made his statement, he knew what sum of money would be required from employers as a result of the Cabinet's decision. I doubt whether the majority of Cabinet Ministers knew what the effect would be. That was why the Secretary of State hurriedly went to the Prime Minister to indicate the implications of the decision. I am not saying that the right hon. and learned Gentleman deliberately misled the House. I am saying that he made a statement in which he did not make clear the effect upon employers. That led to a great deal of misunderstanding, including among the majority of employers.
The hon. Member for Bury St. Edmunds implied that he supported the Bill because it would bring new money into the NHS. Unless I misunderstand the Bill or have been misled, it will not bring in any new money for the Service. It may be a taxation method of paying for the NHS, but


it will not bring in new money. Indeed, the Chancellor of the Exchequer said that among the savings to be made was a cut of £25 million in the funds available for the NHS. Far from bringing more money into the Service, the Government will take money from it.
What irritates me about the Bill is that it shows that the Government are stumbling from week to week with measures that they have not thought out. We spent many months in the previous Session dealing with legislation to take away the legal entitlements of those who paid national insurance contributions The Government introduced Bills to reduce the rights of pensioners and those on earnings-related benefits and the rights—written into statute—of those on short-term benefits The Government took away rights that had been paid for by contributors to the national insurance system. I fear that we shall have further legislation in the current Session that will take away further rights from recipients of national insurance benefits as a way of saving the Government from a dilemma into which they have got themselves.
The Bill provides that contributors should pay more for less. There was a discussion earlier about the insurance principle. Whatever that principle is, it is based on people knowing what they will get for their money in the end. Of course, the money is not paid into an account and conserved for contributors for when they retire or are sick. It is paid in order to provide for the benefits that have to be paid in that year, but each person pays contributions on the basis of a knowledge of laws passed by the House detailing what his entitlement will be. The Bill undermines still further the whole principle of the national insurance scheme.
The hon. Member for Bury St. Edmunds says that we have a complicated scheme and that Beveridge would be horrified by it. He has to recognise that we have introduced many benefits, especially for the disabled, that Beveridge did not conceive of, but certainly Beveridge would be horrified to think that we were using national insurance contributions as a form of taxation. The Chancellor of the Exchequer does not want to introduce a Budget at this stage. He has chosen to try to push the Bill through the House at drarmatic speed—the Second Reading today and the start of the Committee stage on Thursday—in order to raise taxation.
I say to any Conservative Member who claims that the previous Government adopted the same course that, as Secretary of State at that time, I believed that it was wrong to use the national insurance system as a means of taxation. I voted for it, but the present Secretary of State, who is introducing such a scheme, and, I suspect, the hon. Member for Bury St. Edmunds, who is supporting it, voted against it. I do not believe that national insurance contributions and the national insurance system should be used in that way
I agree strongly with what my ton. Friend the Member for Birkenhead (Mr. Field) said—namely, that, proportionally, the highest contributions are being paid by those on lowest earnings while those who are on highest earnings will not have to pay any of the additional impost. That is a regressive form of taxation compared with income tax, on which we shall no doubt be faced with increases in the next Budget.
I hope that the appeals made from both Sides of the House that the Secretary of State and the Government should reconsider both the higher and the lower levels will be heeded. If we are to have the Bill foisted upon

employees, it should be done in a fairer way so that it will not hit as hard on the low paid and will hit harder on the higher paid.
The hon. Member for Bury St. Edmunds asked why the Bill was being introduced. The reason is that the Government have got themselves into an intolerable mess. They are failing to achieve any of the economic objectives that they have set themselves. They may say that the level of inflation is coming down, but it is only coming down from the level to which they increased it. They cannot expect much thanks from the country when we have a level of inflation at 15·4 per cent., which is 5 per cent. higher than the level that the Government inherited and when inflation was substantially increased as a result of the Government's taxation measures, particularly the increase in VAT.

Mr. R. A. McCrindle: The right hon. Gentleman says that is is wrong for the Government to take credit for the reduction in the level of inflation, but he was a member of the previous Labour Government who — having raised the percentage increase in inflation to the upper 20s — went to the country claiming credit for a considerable fall by May 1979.

Mr. Ennals: But that is exactly what we had achieved. We inherited a rising inflation rate which, at 13 per cent. in February 1974, was far higher than the level that the present Government inherited. It went up to over 25 per cent. but, as a result of negotiations with the unions and the responsible way in which they behaved, we brought it down, bit by bit, to single figures. That was no mean achievement. We got no co-operation from Conservative Members. It was a battle that we had to fight ourselves.
There is no credit for the Government in the present level of inflation, and it must be disappointing to them to see the latest figures on the level of earnings. The money supply is virtually out of control, and the estimates on the public sector borrowing requirement shows that it is hopelessly out of hand. Any thought of an increase in living standards was dashed by the Prime Minister, who said that the living standards of our people would inevitably have to fall.
The estimates of the Secretary of State for Social Services in the public expenditure White Paper about the level of unemployment have proved to be wildly wrong. Unemployment has risen much faster than was expected. The Government have got themselves into a mess and have looked for a quick way of escape. They have chosen the national insurance system and intend to hit hardest the employees, particularly those on low incomes, and by doing that they will make a further contribution to the rate of inflation. I hope that the Chief Secretary to the Treasury will tell us his estimate of the impact on inflation of the extra impost on employees.
The Bill is a retrograde step. It was rushed into the House without proper consideration. On Thursday there will not be much time to put it right. There is not much sign that the Government want to put it right. If they can make some improvements, we shall welcome them and do our best to make some. This is a panic measure, introduced because of the appalling economic situation resulting from the Government's policies.

Mr. Anthony Grant: The last time I spoke in the House my speech was followed by that of the right hon. Member for Norwich, North (Mr. Ennals). Today I follow him. I shall speak about the National Health Service later. However, I am glad to notice that the right hon. Gentleman no longer needs the services of the National Health Service.
The debate arises in the aftermath of the most ludicrous hullabaloo. Wild and absurd accusations were made concerning my right hon. and learned Friend the Chancellor of the Exchequer about misleading the House and other nonsense. Anybody who knows the Chancellor will know that he is the last person to mislead anybody, let alone Parliament. The accusations came ill from the right hon. Member for Leeds, East (Mr. Healey), because he introduced the charge and increased it. His attack was total humbug.
We know why the nonsense occurred. It took place during the Opposition leadership contest. The right hon. Gentleman had to make his mark. However, he resembles the man who spent a fortune on curing halitosis only to discover that his best friends did not like him anyway. We can disregard all that nonsense.
As my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) said, the Bill has three purposes. I shall deal with two of them. The problem of unemployment takes up 25 per cent. of the Bill. I regret the necessity for it. I am deeply worried about the unemployment level, as I was when in Government. I am entitled to say that because when I took responsibility unemployment was about 1 million. When we left office, unemployment totalled 600,000. It was particularly galling to see that figure increased to 1,600,000 under the last Government.
I agree that high unemployment will be with us for a long time. In addition to the recession, we must face long-term structural unemployment. In future we shall not require as many jobs of the type which have existed. Somehow we must find replacements. That is serious and should not be the subject of wild and absurd accusations between the two sides of the House. We must do something about it. We must ensure that the necessity which arises in the Bill does not occur year after year.

Mr. Ennals: In the last 15 months of the Labour Government the unemployment level fell each month. Since then the level has increased by 600,000 or 700,000. Was not that a dramatic change in direction?

Mr. Grant: We must examine the record. It is necessary to make political points. When the Government of which the right hon. Gentleman was a distinguished Cabinet member left office, unemployment was 1 million more than when I left office. That is the plain arithmetical fact. In the long term we must discover how to deal with the underlying difficulties of unemployment and thereby avoid the necessity of increasing the constantly rising contribution to unemployment benefit. I am not particularly optimistic, but I have no doubt that one of the ways to do that is to encourage small businesses. That is the only hope. New industry must replace old industries.
I warn my right hon. Friends that if we are not careful more and more people with an entrepreneurial spirit will disappear into the black economy. That is already happening and it is likely to increase. If the burdens upon people who are valuable contributors to small businesses

and the creation of new jobs increase, more will go into the black economy and we shall have further reason to fear the level of unemployment.
Some of the keenest and most enthusiastic of my young constituents who work hard opt out of the system. They refuse to be involved in national insurance stamps or paying tax and they disappear into the black economy, never to return. The Government should take that seriously.

Mr. Eldon Griffiths: Is not that exactly why the Government are right to avoid putting the bulk of an increase on to employers? Should they not share it with the employee, as they are?

Mr. Grant: My hon. Friend is right. That is exactly the point that I sought to make.
I turn to the question of the National Health Service. One-quarter per cent. of the increased charge will be attributable to the National Health Service. I agree with the right hon. Member for Norwich, North that the amount of money available to the National Health Service will not be increased. However, the Government are to be congratulated on maintaining the planned growth of the Health Service and for spending more in real terms than in any of the years when the Labour Government were in power. One result is that the number of people on hospital waiting lists has fallen, from 250,000 under the Labour, Government to 90,000 this year under this Government.
I make no apology for repeating what I said in the House a few weeks ago—that there is a need for the Government to take seriously the National Health Service's financial mess and muddle. One of the reasons is the insufficient use of private enterprise in the ancillary services. I have already declared an interest in a company involved in such work.
The Bill will provide £254 million for the National Health Service. That is the approximate cost each year of cleaning the hospitals. Only 2 per cent. of cleaning is done by private enterprise. In other countries the percentage is higher. Whenever private enterprise has been used in ancillary services, it has been more efficient and cheaper. That better use of resources has freed money for vital medical services.
Great trouble is occuring at a fine hospital, the Great Ormond Street children's hospital. If the press is right, there are quite disgraceful goings on under a singularly unsavoury character who, I believe, is a member of the New Communist Party, whatever that is. We may have further enlightenment about that. That hospital used to be cleaned by a private enterprise firm. Then it was decided to go back to direct labour. After it went back to direct labour, this strange character emerged, and now, much to the detriment of sick children, the system is causing disruption.
The idea that direct labour somehow gets over enormous industrial relations problems is a total illusion. Therefore, the argument used against private enterprise—that there will be industrial relations problems—is not valid.
I therefore ask Ministers, who I know want this to happen, to get hold of the area authorities, shake them up and tell them in no uncertain terms that if they want to continue, if they want the Health Service to have more resources for medical matters, they must use private enterprise where it is feasible and practical so to do. I


would like my right hon. and hon. Friends in the Department of Health and Social Security to conduct a vigorous campaign in this connection in the coming year, if the Health Service is to benefit.
I regret very much the necessity for the Bill, but I accept that it is necessary. I intend to vote for the Bill, as my hon. Friends should do—I am surprised that the Opposition are dividing the House in the circumstances—and if it receives a Second Reading I hope that the Government will heed the observations that I and my hon. friends have made and ensure that a similar Bill will not be necessary this time next year.

Mr. Ioan Evans: On Second Reading of the Hill we are discussing the basis of the Welfare State. This measure is one of a number of measures that have been put forward by this Government to Undermine that basis.
The hon. Member for Bury St. Edmunds (Mr. Griffiths) recalled the war years, when the Coalition Government set up the committee under the chairmanship of Sir William Beveridge to consider the reorganisation of the social services. The idea was that we were fighting to create the Welfare State.
There was a telling phrase in the Beveridge report, which said that there were five giant evils on the road to progress — want, ignorance, idleness, disease and squalor. The aim of the Government that came in at the end of the war was to remove those evils. Under this Government, we are seeing a return of those evils. Ignorance is returning with education cuts, over-sized classes and the denial of real provision to educate our children—all due to the present Government. Squalor is returning, with local authorities denied the resources to create a good local community. The evil of idleness is certainly returning. The increase in unemployment since this Government came to office is the result of their economic strategy, the aim of which seems to be to increase unemployment. The Conservative Party at one time wanted to minimise unemployment and to avoid the problems facing industry. That is why they, too, gave financial support to industry and why we have all sought
But what we are concerned about in the Bill and what Beveridge was concerned about is the problem of poverty. The Labour Government brought in the Welfare State and a huge range of social services under the national insurance and industrial injuries legislation and the National Health Service Act. The last of these was opposed by the Conservative Parry. This was despite the fact that Beveridge made it clear that medical treatment should not depend on insurance contributions or on income, and should be given to those who required it, irrespective of income.
The hon. Member for Harrow, Central (Mr. Grant) talked about provision for the NHS. Under this Government, the prescription charge has been increased again and again. It has gone up from 20p to £1. There are new rumours in Fleet Street that the next Budget will increase it even further. People in need who do not qualify for social benefit may be given four or five prescriptions by their doctor, Under this Government, they have to pay £4 or £5 for these prescriptions. That undermines the whole concept of a free Health Service.

Mr. Anthony Grant: If the hon. Gentleman had been listening, he would have noticed that I described a way in

which money could be saved in the NHS by the greater use of private enterprise for the ancillary services. That could avoid the need for increases in prescription charges and might even reduce them. Therefore, do I have the hon. Gentleman as an ally when I say that we should move away from direct labour to more use of private enterprise in the ancillary services?

Mr. Evans: We all know this theory of privatisation. We are all free to holiday in Monte Carlo and dine at the Ritz. Increased privatisation of health provision will mean that people with a large bank balance will be able to have minor ailments dealt with while poorer people with serious illness will be denied treatment.
Beveridge's idea of the social services was based on a national insurance scheme which would ensure that people would have adequate benefits when they were unemployed. But that still leaves those who do not qualify for unemployment benefit, for whom the social security system must act as a net.
I want to deal with a serious development which shows that the party political consensus for maintaining the Welfare State is being undermined. I want to quote two letters that I have received from the social security office in my constituency. The first relates to a Mr. R, who was told that he should go to a re-establishment centre. Having been there a week, he decided to leave. The local social security office, in answer to a letter of mine, wrote that he
volunteered initially to attend the Department's Re-establishment Centre at Henley-in-Arden near Birmingham in February of this year.
We obtained a vacancy for him on 16th June 1980 and he travelled to the Centre on this day, he stayed there one night and returned home on 17 6 80. He re-claimed at this office on 30 6 80 stating he would not stay at the Centre because of the amount of pocket money he would receive whilst there".
In fact, he tells me that he saw no purpose in remaining. He received £5·95 a week, after having lost his social security benefit. In Britain, in 1980, an adult is expected to live on £5·95.
Mr. R did not stay at the centre. We are told that working people are asked to volunteer for these resettlement camps. It is rather like volunteering in the Army—"You, you and you". Mr. R volunteered, and went, but he did not stay. The Department decided
to seek a Section 10 directive from the local appeal tribunal, this was done and as a result of this claimant is now under the Section 10 directive from 11 August 1980 to 11 August 1981, and this means that unless
Mr. R
attends the Re-establishment Centre, his Supplementary Benefit will be withdrawn.
We have always understood that a person in financial need may go to his local social security office to obtain financial help. This individual has been told that his social supplementary benefit has been stopped. If he were living in a wealthy family, he could ask his brother or parents to assist him. However, he is living with his mother, who is also on social benefit. Her social benefit was reduced because her son was also in receipt of social benefit. This 31-year-old man, who has no means of income, is having to live on the social benefit that his mother is receiving.
When I was told that in my constituency surgery, I did not believe it. I thought "We can say things about this Tory Government"—I have said a few things myself—"but they would not go that far." The hon. Member for Bury St. Edmunds has talked about the gutter. It seems that we have reached it by denying social benefit in this way.
Another case was brought to my attention. A person who is unemployed came to see me. He has been unemployed for only 18 months. If a person has been unemployed for 18 months in South Wales, that is not bad going. In my constituency there is 17 per cent. male unemployment. Beveridge talked about 3 per cent. unemployment. At the jobcentre there are nine vacancies. That is what the Government's economic policy is doing to industry in my valley. We cannot expect an individual to get a job. It is impossible to do so in the present industrial climate.
In another instance a mother came to see me. She was upset. She happened to be of a nervous disposition. Her son did not want to go—I am tempted to call it a concentration camp—to a resettlement camp. He had a good reason for taking that view. The thought of having to leave Mountain Ash in my constituency to go to Henley-in-Arden, to the resettlement camp was something that the mother felt would have an effect on the family.
What happened? When Mr. K. was asked to attend the centre at Henley-in-Arden, he declined. Of course, we are told by the Government that they are asking for volunteers. One would think that if Mr. K. declined to be one of the volunteers his decision would be accepted, but that was not so. One would think that he would continue to receive his social security benefit. Again, it is his only means of finance.
An independent appeal tribunal considered the issue on 30 June 1980 and directed that Mr. K. should attend the centre. The tribunal stated that it had no doubt that the period at the resettlement centre at Henley-in-Arden would be most beneficial to Mr. K. However, he failed to go there. As a result, his supplementary benefit was withdrawn.
Those are two individuals in my constituency. It may be that they are the tip of the iceberg. I make no complaint that there are those who have come from abroad to Britain who have received social benfit. They have done so because they have been in need. That is the basis of a Welfare State. I am talking about two individuals—one is aged 31 years and the other is younger—who have been denied aid although they are seeking employment.
There are employment difficulties. I am aware that there is a world recession. However, the Government are adding to the recession. Since the Government took office, companies have collapsed in my constituentcy that were there since the end of the war. Unemployment has increased to over 3,000. We are witnessing the denial of the basis of a Welfare State. The Welfare State means that if a man is in need the Government will give aid. That principle has been thrown overboard by the Government.
Yesterday in The Sunday Times Isabel Hilton wrote about the jobcentres. They have been described as being run like Colditz. It seems that the Department wanted to involve the media following my complaint. It explained to the media what a good thing the resettlement camps are. It took the reporters and television cameras to Henley-in-Arden and other camps. The reporters talked to those at the camps. We have been led to believe that they were volunteers and that the Government were trying to help the unemployed by taking them away from their homes and involving them.
What are they doing at the resettlement camps? Yesterday The Sunday Times stated:

The day at Plausworth, near Durham, and at Henley-in-Arden begins at 7.30 am and the lights are turned out at 11 pm.
We are talking about adults of 30 years, 40 years and 50 years. The report continues:
The accommodation is spartan—in both places a series of low, temporary buildings which have in the past served a variety of purposes. The work the men do is basic carpentry, cleaning, kitchen or garden work, in return for which they receive £5·95 a week 'pocket' money.
Most of those with whom the journalists spoke complained that they had not wanted to come and that the centre was doing them no good. Tony Underwood of Doncaster said:
I'm here because I had no choice. I'm not learning anything.
Another said:
We call it Colditz.
The Government will probably argue that there has been something of the sort on the statute book for many years. If we had full employment, and if there were more jobs available than applicants to fill them and there were those who were workshy, there might be a case for doing something of the sort that I have described. I believe that some of the camps have been used in the past for itinerants who have no proper sleeping accommodation. It can be argued that the camps serve a social need if they are used for that sort of purpose.
That does not apply to those who are seeking work and who have been denied the opportunity of getting work. There is an obsession among Conservative Members about public expenditure. How much does a place cost at one of the camps? It costs at least £100 per week to keep a man in prison. Presumably the Government are spending over £100 a week to send unemployed persons to these camps.
I have heard it said by the DHSS that there are those among the unemployed with psychiatric problems. However, there is a report in The Times about a psychiatrist, Leonard Fagin, who has studied the problems of the unemployed. He believes that the regime at a resettlement camp can damage morale and that unless work has some meaning it is merely a substitute. There is a report in The Daily Telegraph today from a journalist, Mr. McIlroy, who has been in touch with the Department and with the camp at Henley-in-Arden.
We understand that in 1950 there were 10 resettlement offices. Under the present Government the number has increased to 950. I do not know what that increase has cost us. I suggest that there are many who are entitled to benefits who are not claiming them.
As Members of Parliament, we have to act as advisers to people seeking help. We often ask whether they are receiving mobility or attendance allowances, and they say that they have not been advised that they are legally entitled to such benefits. The DHSS staff should advise people of their legal entitlements rather than harass the unemployed.
A recent article in Labour Weekly was headed:
Putting frighteners on the unemployed".
[HON. MEMBERS: "It is biased".] Yes, Labour Weekly is biased, but it has a bias to try to help those people. The Government have a bias to try to injure them. The article states:
It's Britain 1980, and the men arrive at the centre. They don't know how long they will have to stay there, but they know they'll have to obey orders. Orders may cover keeping themselves and the centre clean and submitting to a medical examination. Failure to obey orders can lead to one month's imprisonment, but the centre itself is not in fact a prison—it's run by the Department of Health and Social Security.
I raised this question with the Prime Minister after we had heard that, because the Government had got into trouble with the Prison Officers Association, the Home Secretary advised magistrates not to send people to prison, even if they had committed a crime I am all for keeping the prison population down, but I do not know whether that is the right way to do so. The Government are now compelling people, whose only crime is that they are unemployed, to attend a resettlement camp in order to receive social security payments.
The Government are undermining the whole basis of the Welfare State. I do not know how many people have lost benfits. The Under-Secretary of State said that it would cost too much to find out the details. Is that because there are so many? What is the reason? The House should demand an answer. There are only 17 resettlement camps. In an attempt to reduce benefits by £50 million, the Government are using these unscrupulous methods to deny people benefits to which they are entitled.
That comes ill from a Government, members of which have been advising the Rossminster Group, which, it has been disclosed, has avoided paying taxes. The Chief Secretary to the Treasury and the Under-Secretary of State for Health and Social Security shake their heads, but the Financial Secretary to the Treasury, the Secretary of State for Trade and the Minister of Agriculture, Fisheries and Food were accused of that in the Granada television programme "World in Action". If it is not true, I hope that the Ministers referred to in the programme will tell the House that it is not true. Nevertheless, whether we now have a denial that they were involved—the denial has rot come from the Ministers concerned—we cannot get away from the fact that there has been massive tax avoidance. In the last Session we had a Budget that took the burden off the wealthy, but in the Bill the burden is being imposed on the people who can ill afford it.
I hope that the Minister will say someting about resettlement camps in his reply. Even if my right hon. and hon. Friends support the Bill, I shall not support it, and I intend to return to the matter at a later stage unless the Government give a full explanation.

Sir Brandon Rhys Williams: Unfortunately, I had to miss part of this debate in order to lead a constituency deputation to the Minister for Health; but I was glad to hear the opening speech of my right hon. Friend the Secretary of State and the reply by the right hon. Member for Salford, West (Mr. Orme).
I am sorry that the right hon. Member for Salford, West will no longer be leading for the Opposition on this subject, because he brought to it a great wealth of sincerity and a grasp of the details, which was valuable to the House and much appreciated on both sides. However, his contribution and that of my right hon. Friend the Secretary or State reminded me of a mysterious game of three-dimensional chess, the rules of which had almost been forgotten. We are reaching the dangerous point where the national insurance system has become such a specialised study that there will soon be no one who understands it.
I welcome the Bill—I shall certainly vote in favour of it—because it is a necessary step towards realism. It contains a number of elements—for example, a reduction in the meaningless Treasury contribution. I have never had a satisfactory explanation of why the principal Act of 1975 adopted the idea that the Treasury would make an 18 per

cent. contribution. Why not 25 or 55 per cent.? From somewhere in the history of national insurance 18 per cent. has grown up as a more or less annual figure, and now my right hon. Friend suggests a reduction to 14·5 per cent.—another completely meaningless figure. It bears no relation to reality.

Mr. Freud: When the hon. Gentleman talks about realism, will he bear in mind tha the Bill will enormously narrow the gap between the low-paid worker and the normally paid recipient of social security benefits? What is realistic about that?

Sir Brandon Rhys Williams: I do not wish to enter into points that would be better raised in Committee. It may surprise the hon. Gentleman, or please the House, to know that I believe that the Bill serves, as has been said, to undermine the national insurance system, and I am glad that it does so, because it is time that it was ended. It also introduces an increase in the visible share of the real burden of the Health Service to be met directly by the beneficiaries. Why should not beneficiaries bear the whole cost? In fact, the beneficiaries pay for the whole cost, but the money does not go through the national insurance fund. It reaches the National Health Service, and through the Health Service it flows back to the beneficiaries through another route. That should also be examined. More seriously, I believe that the Bill will serve to awaken the public to the need to avoid waste in the Welfare State, to avoid misdirection of resources and to insist upon better priorities in the use of the contributors money.
I said that I welcomed the Bill. I do so because I believe that it indeed serves further to undermine the national insurance system. I do not believe that anyone on either side of the House would deny that it is becoming an increasingly rickety sham. It started off on a basis of humbug when the original prospectus was launched by Lloyd George. We were told that it would be financed on the basis of 9d for 4d. Anybody can see that there was something fundamentally wrong from the beginning in such a system. It plainly was an advertising stunt and was not intended to be a convincing and actually sound scheme. [Interruption.]
If the hon. Member for Isle of Ely (Mr. Freud) does not join me in criticising Lloyd George, perhaps he will join me in criticising the national insurance system, which is now based on earnings-related contributions for flat-rate benefits. I personally believe that that is not only right but inevitable, but it is not insurance. It does not have any relationship to any conceivable insurance system. I welcomed and, in fact, I worked for the move towards the financing of the social security system on the basis of earnings-related contributions. I am glad that it happened. However, we need to go much further and to clarify our thinking, not simply to come to rest at this ridiculous halfway point where we find ourselves tonight.
Another aspect of national insurance systems that, to my mind, is utterly illogical is that the benefits change by reference to factors that have no relation to contributions, past or present. The cost of living index determines the level of benefits, but the cost of living index is completely apart from anything that contributors may have put in and which present contributors may be paying. I am well aware of the French concept of repartition — that the redistribution of income is paid for through the arisings of contributions at the same time as the payments are being


made. However, the cost of living index is not a fair fulcrum on which to balance the two sides. It is more in the nature of goblin fruit. It looks delicious until one tries it, and then one weakens and dies.

Mr. Frank Dobson: It is like voting Tory.

Sir Brandon Rhys Williams: There is an aspect of the national insurance system that I think the hon. Member will agree is unacceptable—namely, that, because of deficiencies in the contribution record, benefits are withheld from the people most in need. How can we welcome and wish to perpetuate a system that operates on that basis? It is the exact opposite of what we want.
Also, the automatic nature of the supplementary benefit undermines the whole morality of the system, because the beneficiary qualifies for the one because he has failed to qualify for the other. There is no point in someone making contributions and building up his self-respect on the idea that he has an entitlement to national insurance, because whether or not someone has an entitlement he is entitled to fall back on another aspect of the Welfare State that will protect him from need. The contribution record and everything to do with it is another pointless sham and a waste of time.
I of course accept—and I agreed with the right hon. Member for Salford, West when he said this afternoon that it is important to give the feeling—that the benefit is paid as of right. But it is wrong to duplicate the tax system simply to create that illusion. For instance, child benefit — the former family allowances — was not paid by relation to contributions or to need, and yet there was a virtual 100 per cent. take-up of family allowances. It did not need a contribution record to give people the feeling that their family allowances were payable as of right and that there was no humiliation in drawing them. On the other hand, only a proportion of beneficiaries claim the family income supplement, because of the humiliating element about having to claim. The difficulties of doing so choke off the very people whom we should like to have that benefit.
It is wrong to perpetuate a system that makes it a condition of entitlement that people may not work in order to qualify for unemployment relief—that is to say, they may not work or must not admit to working. Every hon. Member knows that a large proportion of the unemployed enter into work for remuneration of one kind or another. Good luck to them. It is right that they should do so and wrong that we should try to keep a system that enforces idleness on them or enjoins them to become completely idle in order to qualify for benefit. I realise that if we were to encourage people to enter into part-time work when they come out of full-time work there would be a problem for the tax collector; but the pay-as-you-earn system is also a rotten, crashing edifice, and it is high time that we reformed that, too.
Let us look at the national insurance fund itself, which is so much the exercise of the Government Actuary in his supporting paper. The national insurance fund constitutes meaningless symbols. The money has to come from the taxpayer-contributor in order to be paid to the taxpayer-beneficiary. It does not come out of a fund. It does not go into a fund. There are no real assets. It is merely a paper transaction of meaningless value. There is no real carry-

over in the national insurance fund from one year to the next, or even from one week to the next. There are no real assets. The whole pretence is simply a waste of time.
When unemployment rises, as we have seen in the past year, there has to be a rise in income tax or contributions—but income tax and contributions are the same. They are levied in relation to income on an earnings-related basis, and there has to be a rise from somewhere. Whether one calls it a rise in contribution or a rise in income tax is virtually immaterial. There is no fund and there are virtually no benefits.
I believe that the right way is to reconstruct the whole system around the concept of citizenship rather than contributions and to forget the entire fiddle-faddle of the earnings record and entitlement through contributions. We should provide a minimum income guarantee for every citizen, whether in work or not. That sounds revolutionary, but, of course, we are doing it already. I do not believe that we have any citizens—or very few—who die through lack of a minimum income guarantee. We are already providing it, but we do not admit it to ourselves. We do it in a way that gives unnecessary work to tens of thousands of officials.
When people are in work, the minimum income guarantee should replace the net worth of the tax allowances, and when people are out of work it should provide the core of the relief of need without resort to any test of means. In other words, what I am returning to is the need for a full-blown tax credit system instead of the rotten old structure of national insurance.
Some people say that we cannot afford to introduce a tax credit system for the foreseeable future. I say that we cannot afford not to do so because of the approaching administrative collapse of the ridiculous structures that we are still maintaining.
I am sorry that my right hon. Friend the Chief Secretary left the Chamber while I was speaking. I should like to ask him whether he sincerely wants to be efficient in the redistribution of income. I believe that a tax credit scheme of one sort or another has to come. The present system is grinding to a halt so fast that I feel confident that a tax credit scheme will come, and soon enough for me to live to see it.
I shall vote for the Bill tonight, but I hope that we shall very soon see the reconstruction of the whole rotten, divisive, unfair, inefficient, costly and humiliating edifice of the British welfare system on lines that are efficient, comprehensible and humane.

Mr. Robert Hughes: The hon. Member for Kensington (Sir B. Rhys Williams) made a very interesting speech. I do not want to go too far into the very fine detail with which he presented his case, but I can say that from time to time all of us have constituents come to us because their benefit has been ended and they have fallen foul of the system. That often happens in relation to unemployment benefit, the qualification for which is the number of weeks that one has worked, or not worked, in the previous calendar year. Therefore, people are forced on to the social security system when they should not be, because they have been off for a week or two more than the time allowed in the Act.
I agree with the hon. Gentleman that the way in which the benefit system operates is far too complex and cumbersome. It has grown up over the years in an ad hoc


way. As there has been a demand for a particular kind of benefit, it has been grafted on to the original system. Therefore, we have a whole range of different benefits. People never know which they qualify for or do not qualify for. A person may apparently qualify for one benefit and then find that he cannot receive it because he is in receipt of another benefit. That leads to all kinds of expectations being raised. What we really need is a minimum guaranteed income. With it, we could do away with many different benefits and have one proper benefit.
It is inevitable that in this debate what the Chancelor of the Exchequer said in his statement, what he meant to say and what he did not say, how he said it and whether he misled the House, should play a large part. Hon Members on the Government side have rightly—I give them credit for it—rallied to the right and learned Genteleman's defence. They have said what a marvellous man he is and, that he is a man of great integrity who would no more seek to mislead the House than to fly. They say that it was all a misunderstanding by those who listened to the statement. That goes so far as to pretend that the row over what the Chancellor said was bogus and humbug, part of what might be described as the ya-boo of politics.
In fact the matter was much more serious. It is worth quoting exactly what the Chancelor said. Having gone through all the business of the increase in rates and so on, he said:
Having regard, however, to the financial pressures on industry and the way in which the employer's share has grown in recent ears, employers' contribution rates—including hte surcharge—will remain unchanged.'

Mr Patrick Jenkin: "Rates".

Mr Hughes: Of course the Chancellor said "rates". I repeat the sentence in case the right hon. Gentleman thinks that I am misleading the House:
Having regard, however, to the financial pressues on industry and the way in which the employer's share has grown in recent years, employers' contribution rates—
certainly, "rates" —
including the surcharge—will remain unchanged."—[Official Report, 24 November 1980.]
However, that contrasted with the way in which the Chancellor stressed how the rates and contributions of ordinary individuals were being increased. It is a question not of the exact words but of the tone in which they were said, stressing the financial difficulties that industry faces. The Chancellor certainly gave the impression, in a statement that was not wholly welcomed on both sides of the House, that the employers would not pay any more.

Mr Peter Bottomley: Does the hon. Gentleman know whether it would be legal to apply the unchanged rate to an earnings range different from that on which the employee pays his national insurance contribution?

Mr Hughes: My understanding is that the Chancellor could have changed the rate and left the total paid by industry exactly the same. In any event—

Mr Andrew F. Bennett: We now have the Bill.

Mr Hughes: I was coming to that. Even if my interpretation is wrong, we have a Bill to change the rates. The Government could easily have reduced the employers' liability under the Bill.
A clear impression was given in the House, and it was widely understood outside, that because of industry's great financial difficulties—the problems of liquidity and high

interest rates — the right hon. and learned Gentleman would not add to its burden through this measure. The fact is that he has increased its burden. The Chief Secretary to the Treasury admitted, once the whole matter became public knowledge, that it would probably have been more prudent to make both announcements on the same day, at the same time.
Perhaps the Chancellor did not understand the position himself. What happened may or may not have been inadvertent, but it came after a whole series of occasions on which the Government made information available by written answer. They had ample opportunity to make the information available. This is what distinguishes this occasion from previous times when both rates and the sums involved were increased and the information was made available by written answer.
I do not dispute that in the days of the Labour Government the liability on both industry and individuals was announced by written answer. However, the Chancellor came to the House with a prepared statement about what was happening, and, for reasons that none of us fully understands chose to remain silent about the additional burden that was being put on industry, If the Government are to retain any credibility, they must be honest with the House and the country.
Under the Bill, a sum of about £1 billion will be raised from workers. Who will pay the money, and how will they pay it? In line with what might almost be called Tory orthodoxy, the lowest paid will be the worst hit. If there was any cheering aspect of the Chancellor's mini-budget, it was the return almost to Tory orthodoxy. The Chancellor seemed to be almost turning his face against the new-fashioned monetarism.
The lowest paid will have to bear the biggest proportional burden. For example, I understand that those who earn between £27 and £29 a week will now pay between £2 and £2·25 in national insurance contributions. That can be described only as regressive taxation. When it is applied to people at the lowest end of the scale, it contradicts a Government who suggest that they came to power with a compassion for ordinary people.
One of the reasons why people at the bottom end of the scale are so badly hit is that the upper limit of the rate has been increased by 22 per cent. but the lower limit has been increased by only 15 per cent. I am advised that the result is that a substantial proportion of 3 million part-time workers in particular will be caught by this new tax—or surtax. That is the advice from reliable sources. It is up to the Government to challenge those figures if they are wrong.
The Government always claim that they came to office to help people, to free them from the restrictive burdens of bureaucracy and so on. If we look at what has happened to marginal tax rates since the Government came to power, we can see who benefits. By next April workers earning the equivalent of £40 a week, at 1979 prices, will keep only 62·25p of every additional pound earned, compared with 68·5p before the June 1979 budget. Those earning £500 a week will keep 40p out of every additional pound, compared with 17p before last year's budget. Here again, we see people at the top end of the scale getting a much better benefit from the Government.
That is typical of the way in which the Government have operated throughout, simply because they have never been in control of the economic situation. They are not in control now. They seem wholly to have misunderstood, or


misread, the effect on the public sector borrowing requirement of the increase in unemployment. It was largely the great increase in the PSBR that led the Government to introduce the Bill.
I do not see the Bill, and the way in which it hits the lower paid, as something in isolation. It is part of a consistent attack on the living standards of working people. We know that benefits have not kept pace with inflation. That is a deliberate policy and the Government cannot deny it. We see increased rents for local authority houses, and there will be increased rents for those who live in private rented accommodation. This is a further attack on working people. We have also had the increase in prescription charges, going up from 20p to £1 per item.
The retail chemists have been stating recently from their own direct experience the more horrific details of people who are asking for time to pay the prescription charges. People are saying to the chemists that they can pay only so much today and that they would like to pay the rest at the end of the week. These reports are not coming from the wild people of the Left. People who criticise the Government are usually quoted as being wild people of the Left. I hardly think that spokesmen for the retail pharmacists can be described as the wild or the loony Left.
The number of people employed in social security benefit offices is being cut, with very severe consequences. It not only adds to the number of unemployed; it leads to a very great reduction in the service given to the people who need the service, and this is happening at a time when they are having to pay more for it. I am sure that every hon. Member, from his own constituency experience, could give dozens of examples—if not more—of how the system is operating today. Perhaps I might be allowed to give just two examples from my own experience.
A constituent came to me and said that she had been thrown out of the house by her husband. The local authority, acting in a very humane and compassionate way, transferred the tenancy of the house to her because she had the children. When she eventually received the keys to the house, she discovered that not a single item of furniture—not even curtains or the linoleum on the floor—was left in the house. Everything had been taken by the husband when he left. When she went to the social security office and asked for some assistance to have the house furnished, she was told "No, you are not entitled to any additional benefit. You are not entitled to any special needs allowance for furniture."
I then raised the matter with the local office, which investigated it. Once the investigation had taken place, the local office made some money available to her. I also received an apology from the office because the initial decision had been taken without even investigating the circumstances. Unfortunately, that is the sort of climate that is to be found in social security benefit offices today.

Mr. David Myles: Is the hon. Gentleman suggesting that it is because of the Government that there are weaknesses in the running of social security benefit offices? Surely, it was the civil servant in the particular office who was failing in his duty. It was not the fault of the Government.

Mr. Hughes: I am very grateful to the hon. Gentleman for that intervention, because it leads me to the very point I want to make. I am indeed blaming the Government for cutting the amount of money available, for reducing the number of staff in benefit offices and for creating a climate of opinion in which people who are genuinely in need are being classed as scroungers. The whole emphasis now is that people should get as little as possible.
There has been an increase in the number of inspectors in the DHSS to look for the so-called scroungers, the tax dodgers—sorry, not the tax-dodgers; I shall come to them later—and the so-called unemployed. The whole emphasis has changed. The basis of the whole system of social security, the Beveridge system, was that when people in need went to the office for help, instead of having to know everything about their entitlements, the staff in the office were supposed to say "What are your circumstances?" and "This is how we can help you." That is not hapening today. Where discretion is available to the staff working in the offices, that discretion very often is not being properly used.
My second example concerns a man who had been unemployed for a number years and who had been asked to go to work in a fish house. He tried it, he lasted there for one day and he had to give up the work. He was not entitled to unemployment benefit because he did not have any contributions record to sustain a claim. He was told that he would not get any social security benefit because of the way in which he had behaved. I should emphasise that the individuals to whom I go in the local offices with particular complaints always investigate them thoroughly, they are courteous, and more often than not they come down on the side of the claimant. But far too often, at the initial contact between claimant and social security office, the decision is against the claimant. He then has to go through the whole appeals procedure in order to try to get the benefit to which in many cases he is shown to be entitled.

Mr. Myles: Is the hon. Gentleman suggesting that this never happened under the Labour Government and that it happens only now?

Mr. Hughes: I am sorry if I have given the impression that incidents of this sort began only when the present Government took office. That is not the case. Of course, they occurred previously as well. But, from my experience, there has been a big increase in the number of people who are getting this kind of treatment. At the end of the day, things very often work out in favour of the claimant. That does not happen only because I have raised the matter with the local office. Other people raise issues as well as Members of Parliament. But people often come to me long after the event, when it is too late for me to help. They tell me their problems and I say "I wish you had come at the right time." I believe that for every case which reaches a Member of Parliament—or is dealt with by the citizens' advice bureau, the local minister or the local councillor—there must be at least four or five people who simply accept the initial decision and who suffer badly as a result, together with their families.
This is happening because of the new climate of opinion in benefit offices. We have not heard much recently from the hon. Member for Aberdeen, South (Mr. Sproat) about people getting benefit to which they are not entitled, but the point is heard constantly. We heard from the hon.


Member for Bury St. Edmunds (Mr. Griffiths) that it is the people who are not entitled to the benefit who are getting the best deal out of the social security service and that the people who are entitled to the benefit are not getting it because they do not know how to work the system. But I believe that what is happening at the present time constitutes a very severe attack on the Welfare State.
Another proposition has been put to us during the days and nights when we have discussed these matters. That is the possibility that benefits will be taxed; that as part of the Government's drive against inflation they will lake more money from the people who are in the greatest need. That will do a fat lot of good for inflation. If the Government are to tax benefits, does it mean that contributions will be offset against tax as part of normal expenses? We have heard nothing at all about that side of the coin.
We have heard a great deal about how the Health Service is being improved. I have heard nice-sounding phrases about the amount going into the Health Service increasing. That surprises me. Finance officers in any area health board, if asked, will say that they have no idea how they will manage to balance their budgets in the coming year because of the cuts. The Health Service is under severe attack. The Government are ashamed not to be able to boast how they are cutting back on the Health Service. Unemployment is getting worse because of Government policy. The Government's strategy is wrong.
If the Government had done their duty properly, the Social Security (Contributions) Bill would be unnecessary. They should ensure that they collect taxes from the right people. I hope that the Minister of State. Treasury, the hon. and learned Member for Dover and Deal (Mr. Rees), will pay attention, because I wish to refer to a measure which would have made the Bill unnecessary in terms of the money that is proposed to be raised by these provisions. The Government should ensure that those who are due to pay tax pay it. We hear how some people are able to work the system. If one has enough money to hire tax experts and people learned in the law, one can certainly beat the system.
There has been criticism in the House about the activities of the Rossminster Group. One of the most serious aspects about the Rossminster Group, on which I tope we shall have a full debate before too long, is not just that it looks for ways to exploit the tax laws for the benefit of its clients. Any company or individual who can afford it can go to a tax consultant and say "This is my income and these are my outgoings. Do the best you can for me with the Revenue."
As I understand it, the Rossminster Group was deliberately seeking legal ways of concocting tax avoidance schemes and then selling them to customers, saying "Come to us and we will ensure that you avoid paying tax." That kind of activity goes beyond legitimate advice by tax consultants to clients who have income and expenditure problems. I hope that we shall have a full debate on that matter, because my constituents who are in difficulties—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. I cannot see how that can be part of the Bill.

Mr. Hughes: I accept that it is not part of the Bill, Mr. Deputy Speaker. My point is that if the revenue were properly collected the Bill would not be necessary.
Pensioners in my constituency who manage to get part-time work from which they earn perhaps £4 a week on top of their pensions are often hit. They come to me and say "The Revenue wants £200 immediately." There is a qualitative difference between the treatment of ordinary PAYE individuals and those who have the wherewithal to get proper tax advice.
The Government are doing a great disservice to the country by the way they constantly harp on its problems being caused by workers and by proceeding to hit workers in every possible way. We are constantly told that we need adjustments to the system—for example, that we need to change the retail price index because certain items ought not to be in it. The Government are all the time seeking to put a gloss on the way that they are running the country. However, they will not convince my constituents or the majority of people that they are doing their job in a way that benefits ordinary people or that this is anything other than a mean and petty Bill which should not have been brought before the House.

Mr. Peter Bottomley: The announcement of the responsibilities of members of the Shadow Cabinet must have been exciting to most Opposition Members earlier, because we have heard at least two speeches that showed that they did not gain much benefit from earlier contributions to the debate.
The Opposition intend to vote against the Bill, so the hon. Member for Aberdare (Mr. Evans) will not be alone if he does what he has threatened to do.
The major point about the debate is the benefit to the tax system which we have got wrong. During my five and a half years as a Member of the House, we have had a number of debates in which this matter has been brought up. What worries me is that we have not had anything like the kind of thinking that went into the Beveridge report—perhaps because we have got away from the habit of having one person produce a report and have gone on to committees and Green Papers, which I often welcome.
As the hon. Member for Birkenhead (Mr. Field) said, the difficulty is that our tax base is too narrow. The hon. Gentleman said that only about 45 per cent. of personal income is taxed, because of tax allowances in the main. It could probably be made a smaller proportion if one added in the value of company cars. There is a report in the evening paper today pointing out that three out of lour cars are bought by businesses for employees. No one could possibly claim that most of those were needed for company business. If we consider mortgage interest relief, company cars and a whole spread of allowances which have little economic purpose, we can see why taxation rates are relatively high. We can also see why many more working people are now paying tax than when Beveridge produced his report and when Lloyd George brought in some of the elements of the Welfare State.
The interaction between the system of benefit contributions and the taxation system has become so chaotic that it is almost impossible to think of anyway of making any significant change for the next four or five years.
On the narrow point of what is in the Bill rather than the general background, it is clear that there has been a great deal of synthetic anger during the past few weeks. I am rather surprised. The protestations by Opposition Members and what has appeared in newspaper reports


show that very few Labour Members are aware of how the national insurance contribution system works. From my experience in industrial relations and management, it was plain to me, after my right hon. and learned Friend the Chancellor of the Exchequer sat down, that he had announced a change in the basis on which national insurance contributions were made. He had raised the upper and lower limits. He had raised the rate at which the employee was to make national insurance contributions and he was not proposing to change the rate at which employers would make contributions. Therefore, nothing surprised me more than to read a day and a half later that this had been missed by all Opposition Members and, from the way that it was taken up in the press, by most of the press as well.
I should have thought that Opposition Members who had previously employed people, worked in nationalised industries, been Ministers in the Labour Government, been shop stewards and had experience on the trade union side would have been aware how the national insurance contributions system worked. However, in their protestations they showed that they were totally ignorant of how so much of the money for national insurance and other
We have heard from two Opposition Members enough to show that they do not know what is involved in raising the lower and upper limits. One hon. Gentleman said that, because the upper limit had been raised by a higher percentage than the lower limit, the higher earners were getting off more easily. In fact, it is the reverse. If the higher limit had been raised by a smaller percentage than the lower limit, those who had previously been paying the employee rate would be paying less, making allowance for inflation. If one raises the upper limit by a greater amount, it is more redistributive than raising it by a small amount.
The right hon. Member for Norwich, North (Mr. Ennals) said that the best off get off and do not have to make any payments. He also got it wrong. The person with the highest income in the country still pays the higher rate on the increased limit of up to £200. The right hon. Gentleman was trying to point out that if one takes national insurance contributions and income tax together, the gradient has a kink when one drops over the higher limit. That is a separate point. He was probably aware of it when he introduced the 1975 Act. Although this is not the time to deal with this subject, I should point out that the anomaly still exists. It has no justification other than the so-called insurance contributory principle.
My hon. Friend the Member for Derbyshire, West (Mr. Parris) asked the hon. Member for Birkenhead to explain the benefit of an insurance principle. I thought that the hon. Member for Birkenhead failed to give the simplest argument in favour of the insurance principle. That argument has nothing to do with contributions. It is that if someone is entitled to benefit he will get the benefit whatever his other earnings or assets might be. For his first period of unemployment, sickness or lack of attendance at work, for whatever reason, he has the advantage that he automatically gets the sum that he expects to receive without any investigation. At times, many of us are sick or unemployed. At those times it is ridiculous to have to undergo the means tests or investigations required for supplementary benefit. That is the basis of an insurance principle.
The Government raised the employee rate by at least one-quarter of 1 per cent. because they suspected—they have been proved right today—that changing the rate of national insurance contributions for the employee receives far less attention than the raising of income tax. That is proved by the poor attendance here today. Indeed, I regret the poor attendance. We should give as much attention to the national insurance side of contributions as we do to income tax.
I should prefer the Government to raise the money from indirect taxation. However, I recognise that the Government,, like the previous Labour Government, would face a problem if they were to do anything that appeared to raise the retail price index. The retail price index has become too much of a totem in our society. We should be willing to recognise that whether Government revenue is raised by charges, rates, tax, indirect taxation, or—as is preferable—by raising the sinners' taxes on tobacco or alcohol, it will have the same impact on the consumer. It will still take money out of the consumer's pocket or will prevent money from reaching it. The differential impact on the retail price index should be irrevelant. The important point is whether people are better off and whether people get the benefits and services that they want.
I turn to some of the other reasons for raising the employee contribution. The Government should recognise that they have done well to maintain Health Service spending at the level planned by the Labour Government. I congratulate them. More hon. Members should recognise the Government's achievement.
In the same way, we should recognise that educational spending per capita is increasing in real terms. I accept that there have been cuts in education, but the Government intend to increase spending per head of the number of children in education. I welcome that. I also welcome the fact that the retirement pension will be maintained in line with inflation over the two years as a whole. I regret that the Government have not been able to do the same for child benefit.
The thrust of the Government's policy is to try to get away from the poverty plateau. Therefore, they should aim to raise child benefit. It is impossible to take the coypu catcher mentioned by the hon. Member for Isle of Ely (Mr. Freud)—the person on £55 or £60 a week who is supporting a spouse and children—off the poverty plateau even if one gives him a pay increase of 50 per cent. If such a person received a pay increase of 50 per cent., he would be only about £5 better off.

Mr. Dobson: Does not the hon. Member for Woolwich, West (Mr. Bottomley) accept that it is fraudulent to claim that the Government are maintaining expenditure on the Health Service at the same level in real terms? Does he not realise that that can be true only if one ignores the extra amount that the Health Service must pay to the VAT man? As far as I know, the VAT man does not contribute to the Health Service. Therefore, the hon. Gentleman's figures are fraudulent.

Mr. Bottomley: If I am correct about spending being maintained on the Health Service in real terms, the overall VAT payments, including payments made in part by the Health Service, contribute to that.
I turn to the point made by the hon. Member for Stockport, North (Mr. Bennett). I think that he spoke with


his tongue in his cheek, but it was difficult to see where his cheek was because of his heard. He said that the Government aimed to have unemployment at a certain level. The Government did not aim to have unemployment at a certain level. They were required to make an estimate, and they did so in good faith. The trade union movement did not aim to contribute heavily to the increase in unemployment when it helped to settle pay claims that led during the past two years to pay increases of 50 per cent. for most of those in work. It was plain to both the TUC and the employers, who sat on the other side of the table, that if the gross national product did not grow—and most people expected it to decline—pay increases at anything like that level would lead to more people losing their jobs.

Mr. Andrew F. Bennett: I quoted 20 firms in Stockport where there have been substantial numbers of redundancies. Often the greatest number of redundancies occurred in firms in which the pay settlements were most moderate. In addition, in several of the firms that paid large increases last year, there were no redundancies. Can the hon. Gentleman explain that?

Mr. Bottomley: I cannot. Those of us who have been involved in pay settlements during the past two years have contributed greatly to the extra increase in unemployment. Indeed, we have done more than that.

Mrs. Elaine Kellett-Bowman: Does not my hon. Friend agree that it is extremely sad that groups of workers such as the textile and footwear workers, whose industrial relations record is superb and as good as that of the agricultural workers, and whose pay claims have been moderate, suffer because other sectors of industry have made immoderate pay claims? Does he not agree that such ray demands have increased the costs to employers and hereby contributed to redundancies that have not been deserved?

Mr. Bottomley: The consequential price increases have a greater impact on Government spending, because of the differential price factor. I hope that I have used the right technical term. Government spending tends to rise faster than the rate of inflation because much of what the Government spend their money on sees a slower rate of increase in productivity than the rest of private industry.
During the past two years we have made life worse for all of us. The Cabinet and the Chancellor of the Exchequer had to consider how far those who remained at work should be asked to contribute to maintaining the Health Service and to maintaining benefits to those thrown out of work. The Government came to the House and asked us to contribute more. I am willing to do that.
I ask my right hon. Friend the Chief Secretary to pay more attention to the role of child benefit. When I put forward the case for restoring the level of child benefit—even to the level at which it was 25 years ago—people say that it would cost, for example, £700 million. They say that it would increase the public sector borrowing requirement and that we cannot afford that. The CBI will want to know how much it will cost. When it is told that it might cost £700 million, it will say that is is telling the Government to reduce the impact of Government borrowing. If one puts that proposition to the TUC, it will say that the only answer to low pay is to raise pay rather than the benefits that come through the community.

Mr. Orme: The hon. Gentleman has just listed a number of organisations when speaking about child benefit, but he said that the TUC was more interested in pay than in child benefit. I am sure that he is aware that the TUC is very interested in child benefit.

Mr. Bottomley: I am grateful for the correction suggested by the right hon. Gentleman.
When I asked my right hon. Friend the Prime Minister a year ago what representations she had received from the TUC or the CBI about an increase in child benefit, the answer was "None'. That is a fact. It is not something that I welcome. It is not a point that I am throwing against the TUC. I am trying to put a point to the Government. If we are trying to get a 6 per cent. cash limit in the public sector accepted during the coming year and to have the same thing or rather better in the following year—by "better", I mean a lower limit—how shall we get a large number of people in low-paid jobs with family responsibilities to be able to accept it?
I believe that the only way that we can do this is for the Government to say in advance that if inflation, or whatever measure they choose, is brought down to a certain target—say, 8 per cent. next year, or whatever they believe is realistic—they will then increase child benefit by more than inflation. What has happened in the past is that the Treasury, the Cabinet or the Government in one way or another come around at the end of the year just before the Budget and say "Because inflation is rather higher than it ought to be, we cannot afford to raise child benefit very much." They do not say so in advance. They do not give those of us who are looking after dependants during the year any incentive to try to help to reduce the level of our settlements. One cannot reduce the level of claims, but one can help to influence the level of settlements.
If the Government were willing to come out with sonic tentative plans which they would be willing to bring into effect if we could get the level of interest rates down or the level of inflation down, or whatever it may be, I think that they would then find that many more people were willing to do what it is necessary for them to do—to get rid of inflation.
The reason why we have this Bill tonight and the reason why we have extra unemployment as well is that our inflation has been running unnecessarily high. During the debate on the Queen's Speech, my greatest disappointment was hearing not a single speech from the Opposition Benches about the impact of inflation or the significance of pay claims and settlements on inflation. If we are to learn the lesson of the past 25 years, we must try to bring all these things together and to give some reason to the majority of decent people to support what was the aim of the previous Government and is the aim of the present Government and my aim—to stop unemployment rising, to keep inflation coming down, to bring clown interest rates and to make sure that we are as competitive as our industrial competitors around the world.

Mr. Bob Cryer: I tend to differ from the hon. Member for Woolwich, West (Mr. Bottomley). As the report by the Government Actuary on the financial provisions makes clear, the purpose of the Bill is to provide, at least in part, for increased unemployment. I do not think that it is chance. The three years of unparalleled austerity mentioned by the Chief Secretary to the Treasury


about 12 months ago were part of the Government's plan, and they knew very well that austerity meant austerity by an increase in the dole queues.
If one runs a high interest rate economy because one believes that it is a necessary concomitant of market forces to control the money supply, and if one knows that that will cause a crisis in many firms and will cause many to close or to reduce their work forces, that increases unemployment. It is not chance. From the Government's point of view, it also has the advantage that it is an attack on the trade union movement. Most members of the present Cabinet are delighted about that. They hate and fear trade unions, so they are delighted if by increasing unemployment they can decrease trade union membership and effectiveness.
I do not think that it is any chance that we have longer dole queues. It is part of deliberate Government policy. What I find particularly repulsive is the fact that deliberate policies have brought about a deliberate lengthening of the dole queues, following a poster campaign prior to the last general election, run by Saatchi and Saatchi, showing false dole queues outside false employment exchanges and saying "Labour is not working", with the clear implication that the next Conservative Government, which they hoped would be elected, would alter all that and provide jobs. The Bill is testimony to the fact that that is not true and that the Conservatives were elected on a false prospectus.
We are now having to pay for the Government's crazy economics. To cut back on public expenditure and lengthen the dole queues only increases public expenditure to pay for those very lengthening dole queues in the form of unemployment benefit, supplementary benefits, retraining facilities and everything that the community picks up.
The hon. Member for Lancaster (Mrs. Kellett-Bowman) pointed out that the dubious economics of the Government do not seem to apply to a wide range of industries. She mentioned textiles. The Prime Minister and her cronies are always talking about our industry not being co-operative. They say that there should be reasonably low wage demands and high investment. It has all happened in the textile industry. The unions have been co-operative. The have accepted all sorts of innovations, such as two-shift and three-shift working, and modern machinery. What has happened? They have been kicked in the teeth. Mill after mill has closed. We have a massive balance of trade deficit in textiles, and we still find lengthening dole queues.

Mrs. Kellett-Bowman: Does the hon. Gentleman agree that the problems in the textile industry arise as a result of a not perfect negotiation of the multi-fibre arrangement, and the bilateral agreements that went with it, by the previous Government?
I am sure that the hon. Gentleman and the hon. Member for Stockport, North (Mr. Bennett) will agree that that is something that must be remedied in the forthcoming renegotiation of the MFA and the bilaterals that go with it.

Mr. Cryer: I do not want to go too far down that path. The EEC has proved notably ineffective in applying the MFA, which was negotiated in good faith and with a decent mandate. I hope that the hon. Lady will bring pressure to bear on the Conservative Government to make

sure that they negotiate a tough MFA. She ought to understand that the Department of Trade is riddled with free traders and Eurofanatics. Those are the two overriding pillars of philosophy of that Department. If it had had its way in 1978, the MFA would not have been anywhere near as good as it was.
One of the reasons for the loss of jobs in the textile industry is the inept and inert way in which the EEC has carried out its job. However, I do not want to go too far down that road. I simply point out that one of the reasons for the Bill and the increased contributions to pay for the unemployed is reflected in constituencies throughout the country.
Since May 1979 the achievement of the Conservative Government in Keighley has been to increase unemployment by 110 per cent. It would be very interesting to hear what the Government propose to do to get unemployment back to the level that existed when they came into office. They can argue that unemployment increased during the period of office of the Labour Government, and that is right. It was too high then, but it is a damned sight higher now, and I want to know what the Tories propose to do to get it down to the level that it was when they were elected. What do they propose to do to get interest rates down to the level at which they operated when they got into office? If they were to strive only for the targets that they had when they were elected, that would not be bad, and if they were to achieve that level we should not need this legislation.
The Bill is a tax by another name, the reason being that the Government do not want to be seen to capitulate on their proud boast when they came into office. If we float back 18 months or so, we recall their boast that they would reduce direct tax—income tax—which would stimulate entrepreneurs, provide jobs and get the economy going, because the level of unemployment that they had inherited was too high.
I want to know where all the entrepreneurs have gone. They were supposed to be stimulated. They were supposed to be creating jobs and making high-quality decisions. We knew it would not work. The Government believed it. What has happened to this cherished belief? The entrepreneurs, the people on whom the Government relied, have not turned up, the regions are suffering more than ever and the jobs have not been produced.
In order to maintain the mythology that the tax concessions would stimulate this entrepreneurial spirit, the Government do not want to move back to obtaining the revenue by direct tax, so they are producing an increase in insurance contributions. It is a tax by any other name. The difference is that an increase in direct tax would have been a good deal fairer, because the people whose shoulders were broadest would have paid more. That would have been essentially much fairer than the system that the Government propose.
Some of the comments during this debate, especially those of the hon. Member for Bury St. Edmunds (Mr. Griffiths), suggested that the people at the poorest end of the social scale—those in receipt of unemployment benefit and supplementary benefit—include amongst their number certain racketeers. The hon. Gentleman ought to realise that whenever we on the Opposition Benches suggest double standards on the part of hon. Members who criticise the poor, we are told that it is not done, that it is not nice and that it is going into the political gutter.
I like people who say "Do as I do" and not those who say "Do as I say". People who are in receipt of public funds—just as much as those who are on supplementary benefit and unemployment pay—and who have several directorships and parliamentary adviserships, and who take advantage of everything going, should not be surprised if they are criticised when they suggest that some recipients of supplementary benefit and unemployment pay perhaps do not quite qualify and are racketeers, that people should not know their rights and that it is a waste of time printing material to supply that information. It is really a case of double standards.
The other feature that I deplore about such comments is that if anyone makes a suggestion of that nature, it is a smear that spreads right across every supplementary benefit and unemployment benefit claimant. It is not good enough to make suggestions of that kind.
Everyone has said how complicated our welfare system is. It is complicated because Governments have laid down a massive number of regulations to try to ensure that people are qualified to receive either supplementary benefit or unemployment benefit. People do not go to Government offices arid receive payments when they do not qualify for them. There is no question of money simply being doled out of a bag. That is why the system is complicated. People are subjected to close scrutiny before, a payment is made. It is most unfair to suggest that it is otherwise.
Another Government supporter said in criticism of the Bill that national insurance contributions should not be increased too much because small firms were disappearing into the black economy. I think that the hon. Gentleman probably got it mixed up with "The Black Hole", which is a Walt Disney film about people disappearing into space. Apart from that, he meant that people were trying to evade their obligations, which placed a burden on firms. That is valid, because it places a larger heavier burden on employers as well as on employees.
My hon. Friend the Member for Aberdeen, North (Mr. Hughes) said that the Chancellor of the Exchequer should lave made the increased burden on employers clear beyond peradventure when he made his statement. The Chief Secretary was right to say that the framework of the statement had been imprudent—I think that that was the word—which indicated that it could have been improved. Of course it could, and should, have been improved. The tradition of Ministers not giving the House full information is deeply embedded in the system. That is wrong. It is time that we moved towards a more open system of government. The very notion of withholding any relevant factor should be cast to one side. Ministers should disclose full information to the House and take whatever criticisms are due to them.
We are suspicious about the omission of information because that information would have invited criticism. A Minister should ensure that every scrap of information is given, even if it invites criticism. He must stand at the Dispatch Box and give as good as he gets. That would not be true of the Chancellor of the Exchequer, but it would be true of many other Ministers, including the Chief Secretary.
Small firms cannot afford the fees that an organisation such as Rossminster requires. That is why, according to one Conservative Member, small firms are disappearing into the black economy. When legislation comes before Parliament because of an increased public expenditure

requirement that involves increasing a tax—although it is called a social security contribution, it is a tax—there is an obligation to give full information, especially when information about tax avoidance or evasion has been made public.
We are not sure whether it is avoidance or evasion, because the Inland Revenue might at some future stage find that it is evasion. When a Treasury Minister has given advice to a firm, we are entitled to say that there should be a full and complete debate about it. It is not good enough to say that everyone in the House is an hon. Member and we cannot criticise one another. At least 55 hon. Members signed an early-day motion expressing concern about the position. If we are all hon. Members, our honour must be justified also. We have expressed honourable concern about double standards.
We are talking about national insurance contributions that will affect the lowest paid. They will be a burden on them. At the same time, a defence is made of people who formerly gave tax avoidance advice on a grand scale, possibly leading to the loss of £1 billion to the Inland Revenue. That is not good enough, especially when those who gave the advice—

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. That does not have anything to do with the Bill.

Mr. Cryer: If the tax avoidance advice had not been given, the Bill might not have been necessary, because the Inland Revenue would have been better off by £1 billion. It is relevant from that point of view.
The Bill is regressive and counter-productive to the creation of jobs. We cannot lightly dismiss that when unemployment may be moving towards 3 million by the end of 1981.
The Bill mentions the National Health Service, and my hon. Friends, including my right hon. Friend the Member for Norwich, North (Mr. Ennals), a former Secretary of State for Social Services, have pointed out that the Bill does not increase the allocation to the NHS. Indeed, there has been a cut.
In case there is any misconception, I should emphasise that the Government's motivation is not to maintain the NHS but to diminish it and to move away from a national insurance system, including health service charges, towards private insurance schemes. Near my constituency there is, alas, a private hospital being developed which will allow greedy consultants to get their hands on the rich pickings in the bodies of patients who can afford to pay.
My hon. friend the Member for Holborn and St. Pancras, South (Mr. Dobson) was right to point out that the increase in VAT was a severe blow to the NHS and that many area health authorities found the greatest difficulty in meeting the virtual doubling of that indirect taxation.

Mrs. Kellett-Bowman: It is not many years since the inclusion of private health insurance in workers' terms and conditions was one of the attractions put forward by the Post Office workers' union and one for which the electricians' and plumbers' union fought hard and successfully.

Mr. Cryer: The hon. Member is correct in saying that the EEPTU has negotiated private medical deals as part of wage negotiations. I condemn that, hip and thigh.

Mrs. Kellett-Bowman: The union does not.

Mr. Cryer: The executive does not, but many members do. Since the Conservatives are concerned about freedom of thought, they may be interested to know that the union executive recently censored a member's election document that criticised that deal. The union made a mistake. Any trade union that is involved in propping up the private sector is making a mistake. The Labour Party's view is that the freedom to receive medical attention should depend upon people's illness and not on the depth of their pockets. The better our NHS, the greater will be freedom and security, and the greater will be the possibility of people having what is wrong with them dealt with instead of having to rely on a shoddy little private insurance scheme that will involve checking whether contributions are up to date and whether people have paid for the class of medical work that is needed, as happens in the United States.
The Bill is a regressive measure. It will diminish the job creation potential and carry on the mad merry-go-round that the Government are creating. They are cutting jobs by cutting public expenditure. For example, 92 per cent. of all local authority housing—98 per cent. in Scotland—is built by private enterprise and not by direct works departments. The Government are hitting even the sort of organisations that they support. They are putting people on the dole and are having to raise money through measures such as the Bill to pay for the lengthening dole queues. It is a mad economic system. It is bound to fail, and we will replace it with more Socialist measures.

Mr. R. A. McCrindle: Perhaps predictably, this has been a widely discursive debate in which some speeches have seemed to move far from the provisions of the Bill. The speech of the hon. Member for Keighley (Mr. Cryer), while interesting, was a classic example of that.
The House is aware that my interest in the matters covered by the Bill flows particularly from my long involvement in health and social security measures. We are, however, discussing a measure which has powerful implications for economic policy. I have been struck by the fact that the debate has been strong on condemnation, denunciation and analysis but weak on solutions that the Government could have introduced as alternatives to the proposals in the Bill.
It might be helpful if I examine the possible options that the Government might have pursued, given the economic problems confronting them when the decision had to be taken. I do not suggest that my list is complete, but the Government might have pursued any of three broad options. I hope that I can suggest powerful reasons why it was wise that they did not.
It would have been possible for the Government to let the public sector borrowing requirement continue to rise and, simultaneously, to maintain public services and to refuse to look for additional revenue. In the opinion of some of us, that would have involved committing not just one sin of economic management but three. It is instructive to examine the result of such action. It would have achieved substantial inflationary pressure and ensured that the private sector was squeezed out of borrowing opportunities, and high interest rates would have been necessary if the total credit in circulation was to be kept under some control. I concede that that is an option which the Government might have pursued.
A second option was that the Government might have insisted on a reduction in the public sector borrowing requirement but refused to countenance raising revenue in any way, whether from additional contributions as the Bill proposes or by increasing income tax. The result of that action would have been a necessity to slash the number of public services to a level unacceptable to the Government and to Parliament.
A third option was that the Government might have accepted that the public sector borrowing requirement should be contained and that services should be supported at a reasonable level but that to raise income tax instead of charges would be preferable or, perhaps better, that they should impose a once-for-all excess levy on banking profits.
I put forward these suggestions not because I agree with them but because they have been described as being preferable to that which we are considering. If the last option to which I referred had been adopted, notwithstanding the comments of the hon. Member for Keighley, all incentive to invest—which is so important to the upturn in our economic activity — would have been reduced to the point where it disappeared. I am not as lacking in hope as the hon. Member for Keighley. The provision of an incentive to invest, as a result of the reduction in income tax, remains an important cornerstone of any economic revival. Instead of raising taxes or charges, we might have made a once-for-all levy on bank profits. Superficially, that is an attractive proposition. However, if that had been adopted it would have removed all hope of the banks being able—and some would say that they are duty bound — to extend assistance to business expansion come the upturn. My conclusion is that the proposals in the Bill, which I do not pretend to enjoy or to like, are probably on balance the best that were open to the Government.
I turn to the Bill's details. The increase in contributions concentrates largely on the employee. It is fair to ask why that should be so. Any suggestion that the major impact of the Government's need to raise revenue should have gone instead to the corporate sector overlooks the fact that in the last year or so the corporate sector has been severely bruised. In my judgment, some relief from that bruising is needed.
There can be little argument that the strong pound, which has been such a disadvantage to the corporate sector, has brought some marginal benefits to the private, individual sector. For that reason perhaps more than any other, it is justifiable to concentrate the increases on employee contributions rather than employer contributions. But here I must enter a personal caveat, which I hope the Chief Secretary will take on board. It is possible to support this measure and yet to conclude that there is a certain regressive effect, particularly upon the low paid, inasmuch as the lower earnings limit in effect becomes a tax threshold.
However, one cannot simply make that statement without pointing out that, if the measure is otherwise acceptable, in order to offset that regressive effect on the low paid the Government should turn their attention to an increase in family income supplement to low-paid people in work. I have always felt that the family income supplement was a much maligned and overlooked social benefit which in present circumstances should have priority Government attention when social expenditure could be increased. There is one point about the


employer's contributions that I have not heard so far, although I have listened to most of the debate. The employer's burden is likely to rise by about 8·3 per cent., but that is less than the predicted inflation rate of 11 per cent. during the period in question., The real burden on employers is, therefore, falling rather than rising.
Given the decision to increase charges, all that is being proposed for employers—I shall deliberately resist the temptation to follow the controversy raised by my right hon. and learned Friend the Chancellor of the Exchequer recently—flows directly from the Social Security Act 1975. There are ample precedents for the course that the Government have taken. Therefore, in effect, having created the trigger by which these measures could be introduced, the Opposition now complain when the trigger is employed by their successors.
Notwithstanding the comments of the Opposition, the National Health Service has been virtually untouched by expenditure curbs, but that has been possible only because user charges in the shape of prescription charges and the like have been increased. That is not unreasonable. Nor is it unreasonable that national insurance contributions as a proportion of the total National Health Service expenditure should be increased at the same time.
In all, therefore, the Bill is an important weapon of economic; and social policy. Those of us who have been concerned at the seeming total concentration upon monetary methods of controlling inflation welcome the involvement through the Bill of additional taxation as a further weapon to fight inflation. For that reason, I shall support the Bill tonight.

Mr. Frank Dobson: I seem to be developing a traditional role as the last person to speak before the winding-up speeches. Listening to the debate tonight, I was reminded that just over a week ago I went with great pleasure to watch my distinguished predecessor, now Baroness Jeger, unveil a plaque in Mecklenburgh Square—in what is now my constituency but was once her constituency—to celebrate the centenary of the birth of R. H. Tawney. Tawney's wife was Beveridge's sister.
That collection of intellectuals, some Socialists, some liberals, who surrounded the Beveridges, the Webbs and he Tawneys displayed a characteristic which is totally licking from the Government Front Bench—a combination of compassion and expertise in this sort of topic. The Government Front Bench is now characterised by a total lack of compassion and, in these affairs, an almost total lack of expertise as well.
One result of that is this tax proposal. It is a form of taxation related to national insurance contributions, but a nix it is arid a very regressive one. It bears most heavily on those on lower incomes and more heavily on them than the equivalent tax increases would have done. The lower earnings limit is lower than the tax threshold, and when earnings exceed the limit the contributions on earnings below the limit are brought into consideration. If people go above that benchmark, they are caught for the whole lot. That is certainly regressive.
The Secretary of State is smiling because he knows that I am reading from the brief prepared by the Child Poverty Action Group, but I have smiled through a number of speeches that his officials have written for him, so I have no apology to mike.
One reason for this form of tax, as several of my hon. Friends have said, is that the Government have not been getting the tax income that they should, because such people as the Vesteys and those served by the Rossminster Group have been making certain that they do not pay the taxation that Parliament expected them to pay under legislation passed by successive Governments.
This proposal, in effect, will shift money from the national insurance fund and shovel it into the Treasury. That is not a sound basis on which to proceed at the moment. The badly off who are in work and who will have to pay these increased contributions will do so to save the Prime Minister's face. It seems that the right hon. Lady simply cannot bear to go back on one election pledge—the pledge that there would be no increase in income tax. Instead, we have a poll tax on those in work, bearing more heavily than income tax would on the badly off. The badly off are bearing the brunt of trying to save the Prime Minister's face, and that is deplorable.
The report of the Government Actuary is very enlightening, particularly paragraph 9, which gives the Government's projections for unemployment. If we add all the bits and pieces together, the projection is for an average of 2½ million unemployed throughout 1981–82. I do not want to speculate on whether that will be an overestimate or an underestimate — I should have thought the latter—but I am reminded of the Prime Minister's speech to the Conservative Party conference, which some of us saw on television but most Conservative Members will have seen in person. The right hon. Lady said:
The lady's not for turning.
She went on to say that one of the problems with U-turns was that they took one back to where one had been.
In the Government's own estimate, in the middle of 1981–82 1 million people would like to be back where they were—in productive employment. They will have been denied that opportunity by the Government's policies and they will put a tremendous burden on the Exchequer and the national insurance fund. The Bill is basically a measure to pay for the ill consequences of the Government's deliberate creation of increased unemployment.
There is one final irony, Mr. Deputy Speaker. I have not been a Member of the House for as long as you, but you will probably agree that over the years Ministers have made their reputations by the vigour and effectiveness with which they defended the budgets of their Departments and looked after the people for whom they were responsible. It seems that there has been a reversal since May 1979. It seems that the prizes are awarded to those who can offer up the most to the Treasury and the most in sacrifices—other people's sacrifices, riot their own—to what the Prime Minister wants in the way of reductions in public expenditure. It seems that Quisling is the person who is idolised by the various departmental Ministers, who face us from the Treasury Bench.
This is a totally deplorable and squalid little measure. Since I have been in this place, my right hon. and hon. Friends have been saying that about practically every measure that the Government have introduced. We seem to have an escalation of deplorability in the measures that are introduced. This Bill seems to have escalated to the deepest, bottommost and rottenest sump of the London underground when judged with shoddy and second-rate


measures generally. I hope that the House will join the Opposition in rejecting the Bill, but I doubt very much that that will happen.

9 pm

Mr. David Myles: I shall make a brief contribution to the debate
I am tempted to follow my hon. Friend the Member for Kensington (Sir B. Rhys Williams), the hon. Member for Aberdeen, North (Mr. Hughes) and others who have spoken about the awful complexities of the social security system. With that I agree. Those complexities are matched only by the awful complexity of our taxation system. I wish that the systems could be simplified so that simple souls such as myself could understand them as well as simple souls such as those who have to claim social security benefits. I wish that there could be simplification of the taxation system so that simple souls such as small business men could understand it and so that they would have no need to employ those such as the Rossminster Group, although I have nothing against tax consultants.
I was brought up to understand and believe that nothing was free. In other words, we must contribute something before we can benefit. I have purposely changed the single pronoun "I" to "we". In a Welfare State we contribute collectively, on what has been deemed to be a fair basis, so that all can be protected. It is surely perfectly fair and reasonable that contributions should rise to meet the cost of providing benefits that have increased because of inflation. It is also fair and reasonable that in this period of unemployment, when many are in transition between a job in which they were not really gainfully employed and another where their talents can be more fully utilised, those still in employment, as my right hon. and learned Friend the Chancellor of the Exchequer said, should help to pay the cost of the transition.
It is right that we should cease hiding the cost of benefits merely by increasing our borrowing, which produces a mounting bill for further interest payments. I welcome the fact that as a result of the Bill the percentage rate of the Treasury supplement will be reduced. I welcome the fact that one-quarter per cent. will go to maintain the planned level of the Health Service.
I plead that part of that one-quarter per cent. should be used to improve services for the deaf. I admit an interest as I am deaf myself. That is frequently considered by my right hon. and hon. Friends to be an asset. That is only because I have an excellent hearing aid that enables me to switch on or off when perhaps a Labour Member is wasting my battery. I joke in this matter as many do about deafness. Somehow this affliction does not command the sympathy that other sense losses do. Nevertheless, it is a real affliction for those so handicapped, and I therefore urge that attention be paid to it. With modern technology many things are possible. I hope that with this increase in resource they can be made possible for more of those with this need.
Of course the Bill is not popular, but I am sure that the realism that it demonstrates will be appreciated by all thinking people. I am therefore pleased to give my support.

Mr. J. W. Rooker: That the Bill is not popular is indicated by the fact that the Chief Secretary to the Treasury is to wind up and not a Minister from the Department of Health and Social Security. The Chief Secretary can be relied on with his usual openness, not being "office-soiled", to spell it out exactly as it is. This is a nasty Bill that the Government did not want to introduce. It will raise the tax burden on the low paid in a very unfair way. The right hon. Gentleman may be a bit more forthcoming about his right hon. and learned Friend's original statement after the remarks that I intend to make.
We object most strongly to the undue haste with which the Bill is being pushed through the House. The Secretary of State, I believe, said that the Government had to have Royal Assent by the end of January. There is no reason at all why the Government could not have had Royal Assent by the end of January by having the Second Reading today and putting the Bill through its Committee stage ordinarily in January or even starting before Christmas. It is a very small Bill. It will be very difficult to get massive amendments. There is no possibility of undue delay being caused by any hon. Members on these Benches. In fact, most of the Bill, as the right hon. and learned Gentleman admitted, could be put in an order to be put through in an hour and a half one night and the rest of it in a one-clause Bill without any difficulty whatsoever. The undue haste is probably a symptom of what is to come in the rest of the Session.
My right hon. Friend the Member for Salford, West (Mr. Orme) said that the Bill was not announced in the Queen's Speech. The Bill was announced a few days after the Queen's Speech but was not referred to in that speech. Therefore, we most strongly object and will strongly object on Thursday when the Government attempt to bounce the Bill through the House without adequate debate.
A lot of the speeches have been a lot wider than the Bill and touched on general economic policy. The Bill is basically a weapon of economic policy so far as the Government are concerned. The Bill is part of one of the most extensively leaked mini-Budgets that I can ever remember. I have been a Member of the House for fewer than seven years, but I have seen in that short time a considerable number of Budgets. If we leave aside the two to three weeks before the Chancellor's statement and the press circulations and just start at what was written about on the Sunday before he made his statement, we can see how well orchestrated the Government's propaganda machine was in preparing Conservative Back Benchers for the shock of the statement. That is what it was done for, and it cannot be denied by the Government that there was not a co-ordinated public relations effort before the right hon. and learned Gentleman made his statement.
We will take just the Sunday beforehand. On the front page of The Observer, Adam Raphael stated:
The key measures in what amounts to a direct tax increase mini Budget are:
A £1,000 million increase in employee national insurance contributions. The rate will go up from 6·75 to 7·75 per cent. on 1 April.
It does not say "about." It gives the precise figures. The Sunday Times on the same day reported:
A sharp rise in employees' National Insurance contributions"—


I emphasise "employees", and I ant not arguing about the difference between contributions and rate—I accept that and I will come to that in a moment—
raising n extra £1,000 million a year".
That is the same figure. It did not come out of thin air.
We will take the day of the statement itself, Monday 24 November, but before the statement was made. In the Financial Times we see a piece—I do not know who the author was—which states:
The main elements of what Whitehall still primly refuses to describe as a package or mini Budget will be:
An increase in personal taxation by a large rise from next April in the employees' national insurance contribution. This is the same as raising the basic rate of income tax.
That is not strictly true, although raising the basic rate of income tax would be fairer. That article appeared alongside another article in the Financial Times, referring to the
Testing time for Tory morale".
Richard Evans, lobby editor of the Financial Times, said that one of the crucial tests for the Chancellor would be
to counter the misgivings of a growing number of Conservative Members of Parliament who have become restive in recent weeks because of apparent confusion"—
that was before the Chancellor's statement—
in so many areas of economic policy.
Let us take the morning after the statement — the Horning after the night before. On the Tuesday morning, The Guardian said:
The main economic effect is that the Chancellor is raising an extra £2 billion, half from an increase in the employees' national insurance contributions.
The Financial Times said:
National insurance employees' contributions to be increased text April.
On the inside pages of the Financial Times, Samuel Brittan wrote:
The know-nothing, say-nothing, explain-nothing school of Thought won the Chancellor's car.
He went on to point out:
Employees should pay directly in that form of income tax known as National Insurance contributions for the unemployed and the sick.
There was no mention on the morning after from all those expert, technical financial journalists of the impost on employers. The experts outside tie House did not draw the alleged obvious conclusions Wednesday's press was full of the story.

Mr. Orme: The Chancellor of the Exchequer is here.

Mr. Rooker: My right lion. Friend tells me that the Chancellor is present in the Chamber.
That point had been announced then. It was implicit in he Chancellor's statement that we should all understand what would happen when he changed the rate. That is the point. We were supposed to have known what would happen before the written answer was given. Everyone has said that the Chancellor did not mislead the House and that we should have drawn the obvious conclusions. But people outside the House who spend all their working lives dealing with such matters did not draw the obvious conclusion.
By Wednesday morning, after the written answer and before the Treasury statement, the headlines in The Guardian stated:
Howe in store on hidden pay tax.
The right hon. and learned Member for Hexham (Mr. Rippon), was quoted in The Guardian as saying:
If this"—

the extra tax on employers—
had been understood at the time, there would have been a protest.
The Financial Times said:
The CBI had not realised until last night"—
that was Tuesday night, over 24 hours after the Chancellor's statement—
that employers' contributions would rise because of the vague nature of the Chancellor's statement.
That was the CBI—a body that is supposed to have understood the direct implications of the Chancellor's statement. By Thursday morning, Fleet Street was running riot, with headlines such as that in the Financial Times:
The Cabinet did not discuss the National Insurance rise.
The Times stated:
He should have given the whole picture.
The Guardian stated:
Cabinet kept in the dark over £960 million job tax.
By that time we all knew about the visit to No. 10 Downing Street by the Secretary of State for Social Services and the Chancellor of the Exchequer to explain to the Prime Minister either how they had got it wrong or what they forgot to tell her in the Cabinet on the Thursday of the week before, and to say that the previous Labour Government did the same thing.
At Question Time on Thursday 27 November, the Prime Minister treated the House to what can only be described as sleight of hand. She read out a list of the debates when many of my right hon. Friends had announced, under the law, by written answer, the normal annual change in upper and lower earnings limits. It was unfortunate that she did not give the precise dates. Like the hon. Member for Bury St. Edmunds (Mr. Griffiths), I had to go digging. At each date the Prime Minister gave, the cheers got louder from the nervous hon. Members behind her. But, as I pointed out to the hon. Member for Bury St. Edmunds, not one of those previous written answers by a Labour Secretary of State followed a mini-budget statement in the House by a Chancellor of the Exchequer.
It is part of the normal social security system. That is why the Opposition were so angry about the way in which the Chancellor misled the House. At no time did a Labour Chancellor stand at the Dispatch Box and announce a mini-budget on the day after a statement of that nature had been made.
I do not deny that in 1976 the Second Reading of the National Insurance Surcharge Bill took place on 6 December and the written answer from the Department of Health and Social Security was issued on 7 December. But that Bill was the result of the then Chancellor's mini-budget announcement of the 22 July measures. There was a considerable gap between the Chancellor's statement and the date on which the Bill was brought, to the House.
However, that did not stop Conservative Members complaining bitterly and, I understand, sincerely about the fact that the written answer had been given the day after Second Reading. In fact, the hon. Member for Wells (Mr. Boscawen), the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) and the right hon. Member for St. Ives (Mr. Nott) were all on their feet on 8 December 1976 complaining to you, Mr. Speaker, on points of order. The hon. Member for Wells, now a Government Whip, said:
It is becoming a regrettable practice of Ministers increasingly to announce large increases of taxation of the citizen by means of Written Answers".


The right hon. Member for St. Ives, now Secretary of State for Trade, asked:
Is it correct practice and in accordance with our traditions for the Secretary of State to make an announcement about a very large increase in taxation and not to come to the House".
The hon. Member for Cirencester and Tewkesbury, now a Minister at the Foreign and Commonwealth Office, said:
the Government had come to a conclusion but deliberately deceived the House by not announcing what they had decided."—[Official Report, 8 December 1976; Vol. 922, c. 465–6.]
At least those three members of the Government will understand the anger felt by the Opposition the day after the Chancellor made his statement on the Wednesday.
Here we come to the difference in practice, and this is where I think the Secretary of State became confused when my hon. Friend the Member for Birkenhead (Mr. Field) mentioned the form of the written answer. In addition to the answer given by the Secretary of State for Social Services—a normal part of the process—a copy of the press notice from the Treasury was placed in the Library, following requests from the Library. The staff of the Library had read about it in the press and realised that they did not have a copy. That notice was not on Treasury notepaper. The document gave an exact breakdown of how the £2·4 billion is raised. This is where the figure of £971 million representing the extra burden imposed on employers comes from. The bit of paper had no official heading and was simply headed:
Employees' and employers' contributions to the National Insurance Fund and the National Insurance Surcharge".
I have discovered from inquiries that I have made that this form of Treasury press notice—not even an answer given to a Member of the House, which would appear in Hansard—is the first of its kind. It appeared on 27 November, the day the Chancellor spoke at the Dispatch Box on the Gracious Speech to answer the charge of misleading the House. If all the normal procedures were followed, why did the Treasury issue that press notice? I am told that it was given only to selected journalists and that that is why it was not sent to the Library. Why was the notice issued in the form that it was? Moreover, if such a notice has been issued in that form before, I should like to know the column references in Hansard. That would be a useful piece of information. But it has never been done before, because the way the changes were made by Labour Ministers did not cause the confusion that the Chancellor's statement caused.

Mr. Ennals: Is not the real truth that the Chancellor himself did not know and, having discovered what the situation was, thought he had better tell everyone else what he had discovered?

Mr. Rooker: Of course. But when the debate took place on the Thursday afternoon the information was not available—not in the Library, anyway. No one knew where the information came from. There were press stories saying that the employers would have to pay another £386 million, and there was another report which said that they would have to pay another £580 million. It was only later that we discovered that the extra impost on employers was £971 million. Nobody knew where that figure came from, and it turned out to be on a scrap of paper sent to selected journalists and to the Library. If the Chief Secretary can give me a reference that it has been done before, that will be fine, but here we come to the beginning of further

breaches of the Tory Party manifesto promises. This is where the matter becomes serious. This is where a serious charge can be laid in regard to the low paid.
The Tory party manifesto said, on page 13:
It is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale.
When the Government came to office, the marginal rate of tax at the bottom of the income scale was 31·5p—25p in the pound and 6·5p national insurance. In 1980 they abolished the 25p bottom rate and put 0·25p on the national insurance contribution. That was done in April this year. So in 1980 the figure is 36·75p. By 1981, taking the 30p basic rate tax figure as it is, the figure will be 37·75p. The marginal rate when the Tories came to power was 31.5p, and the marginal rate next April will be 37·75p.—a 20 per cent. increase in the marginal rate of tax at the bottom end of the income scale.
How does that square with the Tory Party election manifesto commitment? The Government have reduced the marginal rates of tax on the higher paid from 83 per cent. to 67 per cent. That is another flagrant breach of the election manifesto pledge. I do not know whether anyone will wish to argue with me about including the national insurance rate with the basic rate of income tax. I suspect that no one will, because most hon. Members who have spoken have linked them. For practical purposes they are a tax. But, if hon. Members are to argue about that, I offer three views from the Conservative Members.
The first is from the Secretary of State for Social Services:
Strictly speaking, the sums involved here are not taxation, but I suspect that for most people increasingly their national insurance contributions have more the quality of taxation than they used to do". — [Official Report, 5 December 1978; Vol.959, c.1369.]
The second quotation is from right hon. Member for St. Ives when, on a point of order in 1976, he was claiming that the increases in national insurance were "a pure tax increase". That was on 8 December.
The latest one is from the Minister for Social Security.
He said:
If we reduce the expenditure from the national insurance fund and if the contribution is also reduced — I am saying 'if' because other factors come into it—we are still fulfilling the objective of reducing taxation because national insurance contributions are a form of tax.
That was on 23 April 1980, when he was trying to kid the Social Services Office that the Government would decrease the contributions to the national insurance fund in April this year—not last year.
Two Conservative Members last year — the hon. Member for Northampton, North (Mr. Marlow) and the hon. Member for Newark (Mr. Alexander) — tabled early-day motion 224, complaining bitterly about the change in the national insurance upper and lower earnings. I do not think that they have been here today. They had clearly got the message that the whole lot was combined taxation.
But the national insurance contribution — as the Committee stage will make abundantly clear — is a grossly regressive tax. Unlike the tax system, where we have a threshold operating below which income tax is not levied, that is not the position in the national insurance system, although on paper it looks as though that is the position. It might be thought that someone earning over the £27 a week threshold set in the Bill will pay only 7·75p in the pound on each pound above the £27, but that is not so. Once he moves from £26·99 to £27·01, he will pay


7·75p in the pound on the whole £27, so that it will be levied from the minimum earnings. That makes it grossly unfair to the low paid. If possible, under the terms of the restrictions on the Money and Ways and Means resolutions, we intend to seek to amend the Bill to prevent that happening.
The other part of the Bill involves Tory promises about the National Health Service. Anyone would think—I hope that he will not—that new money was to come to the NHS from the Bill. That is not so.
In the small print of the Treasury's statement we saw that another £25 million was lopped off the budget of the DHSS. 'That was for drugs efficiency and other matters. In the large print we saw a statement to the effect that £121 million appeared to be floating around which the Government intended to collect for the Health Service but were not now going to collect.
The Secretary of State pointed out that money would have come from the proposals regarding the recovery of road accident costs, the charge on insurance companies and sight-testing, which the House obviously would not wear, but that is not strictly accurate.
Two other policy decisions were announced in the White Paper, Cmnd. 7841. They were to remove the existing exemption from dental charges for young people who had left school and to have tighter control over the use of the NHS by foreign visitors. There were four policy changes to create that income of £121 million. The secretary of State, in answer to a question of mine last week, did not itemise the £121 million. What is the position on the commitment in the public expenditure White Paper regarding foreign visitors and NHS treatment? HOW much is involved?
The attack on the low paid has gone on apace, not only because of the operation of the national insurance fund—I have already referred to its regressive nature—but because the Government halve almost fiddled the increases in the upper and lower earnings limits. It is known that the percentage increases in the upper and lower earnings limits are not the same. The lower earnings limit—£23 to £27—is about 17 per cent. The higher earnings limit—£165 £200—is about 21 or 22 per cent. Why should there he that difference? Why should they not be raised by the game amount? If it is right to raise the higher limit by 21 per cent., why not the lower limit?
The snag is that the Government are bound by previous Acts, which they are not seeking to change, that the lower 1imit must mater within 49p the old-age pension. If Me Government had not changed the law about raising the old-age pension and cut the link with earnings or prices, whichever is the higher, the old-age pension increase of 16½ per cent. that has just been granted would have matched earnings, which are 21 per cent. That change in the Social Security Act created the reason for raising the lower earnings limit by only 17 per cent., and that means that more lower-paid workers will be sucked into payment. Fart-time workers in industries where part-time work is prevalent—for example, the hotel and catering industry—will be hit severely by the failure to raise the lower earnings limit by the same percentage rate as the upper earnings limit.
Yesterday I saw a piece by Woodrow Wyatt claiming that the unemployed should have greater benefits. I do not know where Woodrow Wyatt has been, other than down a the Tote coining it. I do not know whether he

appreciates that more than half of the unemployed do not get unemployment benefit. They do not receive any benefit out of the national insurance fund.
The figures for August—there ma) be others more up to date—show that 1·1 million out of 1·8 million unemployed were not receiving unemployment benefit in any shape or form. Three-quarters of a million were getting supplementary benefit. It is not generally known that about 300,000 registered unemployed signing on the dole once a fortnight do not get a penny piece from the State. They do not get any unemployment or supplementary benefit. Nevertheless, they are included in those figures. There will be no extra for them out of the Bill. Nor will there be any extra benefits for the long-term unemployed. As has been said, it is clear that the DHSS has overpaid Ministers, who are operating a Treasury bucket shop.

Mr. Arthur Lewis: I heard my hon. Friend mention Mr. Woodrow Wyatt. I am sure that my hon. Friend would like to be fair to him. He may not know that besides receiving hundreds of pounds a week from the Sunday Mirror, and many hundreds of pounds a week from his company directorship, he gets about £10,000 a year as chairman, on a part-time basis, of the Horserace Betting Levy Board and free entrance to every race meeting that he wishes to go to. He does very well out of State benefits.

Mr. Rooker: My hon. Friend has reinforced the view that Mr. Woodrow Wyatt knows nothing about the problems of the unemployed. The DHSS has overpaid Ministers of misery, who are operating a Treasury bucket shop of cut-price benefits based on high-price insurance. At the very least, they should be run out of town.
I saw a long, discursive article in The Sunday Times. It discussed the replacement of the Chancellor of the Exchequer. The article was written by Hugo Young. Indeed, it is worrying. It said:
If there were to be a change, the smart money could swing to a surprising candidate, Patrick Jenkin, the Secretary for Health and Social Services. Exchanging Jenkin for Howe might seem a dubious bargain politically. On the other hand, Jenkin showed Thatcherite virtue by defending the Treasury's case for cuts from the DHSS.
Only the wets in the Cabinet prevented the cuts from being greater. The right hon. Gentleman is supposedly charged with looking after the interests of pensioners and of the needy and poor.
I would rather see almost anyone at the Treasury than the Secretary of State for Trade, the right hon. Member for St. Ives. Given some of the comments made in the House, that would be very worrying. My hon. Friend the Member for Keighley (Mr. Cryer) was correct. The amount of new money that the Bill will raise in the form of the 1 per cent. contributory increase is £1 billion. That is the same as some of the estimates given for revenue lost as a result of the tax avoidance activities of the Rossminster Group. That is why tax avoidance—however legal it may be—places an impost on the ordinary taxpayers of Britain. We do not often have an example of an increase in the tax rates that is equivalent to the rate mentioned in relation to tax avoidance schemes.
Although the Prime Minister is not here, I should like to ask her how she and the Government have the barefaced cheek to tax the low paid through the national insurance system and the PAYE system in order to support the


activities of those who can afford tax advisers to reduce their tax burdens. The Bill shows the unacceptable double standards of Toryism, and we shall oppose it all the way.

The Chief Secretary to the Treasury (Mr. John Biffen): I see the hon. Member for Renfrewshire, West (Mr. Buchan) in his seat. I congratulate him on being appointed the Opposition spokesman on social security matters. I remember him with affection as a former Agriculture Minister. I thought that he was sound on agriculture. In Tory circles, that is a great compliment.
I am sure that my hon. Friend the Member for Banff (Mr. Myles) will join me in saying that, having conquered the complexities of the hill cow subsidy, the nuances of social security benefit will be simplicity itself.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker), for the Opposition, wound up a wide-ranging debate. The hon. Member for Keighley (Mr. Cryer) said that it had great elasticity. I must say that he used it to the full. I shall try to incorporate some references to the multi-fibre arrangement if I get the chance, but I hope that he will not think that I am too neglectful it I confine my remarks to the Bill.
The fact is that the Bill has a wider concern merely than that of the DHSS. Therefore, I represent the somewhat bashful Treasury presence on this occasion. But it is a measure which was referred to by my right hon. and learned Friend the Chancellor when he made his statement on 24 November and considered a range of fiscal propsals which were expected to yield £2,000 million in 1981–82, and the Bill was foremost among those proposals.
From that particular event there has come some subsequent controversy. It has echoed in this Chamber today. I want only to say this, and I say it in measured terms to the hon. Member for Perry Barr, for whom I hold a respectful affection. My right hon. and learned Friend the Chancellor has acted throughout with propriety and integrity, and those who know him believe that they are qualities which are second nature to him.

Mr. Orme: Answer the question.

Mr. Biffen: There I intend to conclude my contribution to that aspect of the debate. I now turn to consider the economic background to the Bill, which justifies, as it were, a Treasury participation in its passage.
The Government have a strategic commitment to the reduction of inflation as a major economic objective, but that policy must be related to tactical judgments in the light of external and domestic circumstances. The hon. Member for Birkenhead (Mr. Field), in a speech of characteristic charm and persuasiveness, conceded that there was a powerful economic case to be considered in this debate. He brought himself to use the term "money supply". One is always beguiled by Merseyside monetarism, but I should like to conduct this argument in my own terms and I shall resist the hon. Gentleman's blandishments.
What I suggest is that the policy requires that a balance is kept between spending and revenue in order to keep borrowing within acceptable limits and thus avoid future inflation and high interest rates. There must always be the fear that a high public sector borrowing requirement is a time bomb carrying the detonation of future levels of inflation and future havoc in interest rates.
The right hon. Member for Norwich, North (Mr. Ennals) asked by what fashion I thought interest rates would be affected by this legislation. He knows perfectly well that that is not a question to which any specific or meaningful reply can be given. But this measure, in the totality of policy, enables one to judge whether the Government are taking measures which show that they are seriously concerned about the containment of public sector borrowing.
The present situation is that the borrowing requirement is expected to be £11,500 million for the current year. That casts a serious shadow before it. Therefore, whatever may be the arguments about the ease with which one can accept a higher borrowing requirement because of the cycle of the recession, I do not dismiss those arguments, but I qualify them by saying that once Governments get used to borrowing on a massive scale it is increasingly difficult for them to give up the habit when the economic cycle turns in such a way that it requires them so to do.
Therefore, as we look at the prospects for 1981–82, I think it is clear that recession has affected likely spending in certain areas. Therefore, we have accepted that there will be additional spending on the nationalised industries. The House will know of the £250 million programmes on employment measures which were presented to the House during the debate on the Queen's Speech by my right hon. Friend the Secretary of State for Employment. We have sought to try to contain that as far as possible by securing economies in other spending programmes, and these measures were set out fully in answers published in Hansard on 24 November.
So the aim is to keep the volume of public expenditure for 1981–82 about 1 per cent. below the expected outturn for the current year. I believe that that aspiration for volume spending remains a modest, practical and prudent aim, and certainly it compares happily with the extravagant public spending plans bequeathed to us by the right hon. Member for Leeds, East (Mr. Healey), which would have resulted in £5,000 million additional expenditure in 1981–82.
Let my right hon. and hon. Friends never cease to remind themselves that, in 1975–76, public sector borrowing as a percentage of our gross domestic product in the previous Parliament reached more than 9½ per cent.
This evening's debate clearly is around the issue of what revenue can do, and revenue will have to play a greater role in the economic policy of this Government. Of course, the scope for additional savings is not exhausted, but further moves in that direction are circumscribed by practical considerations and by political commitment.
In this context, the present Bill, through the provisions of clause 1(2), provides £1,000 million additional revenue which will go to contain the public sector borrowing requirement and the pressure that that maintains upon interest rates. In that sense, I commend it wholeheartedly to my right hon. and hon. Friends.
The House is entitled to judge whether it is securing a preview of the Budget. By convention and necessity, the Budget is the centre-piece of annual economic judgment. Increases in national insurance rates normally are dealt with in November and December, so it is natural that we should be taking this revenue decision now. That is also true of the other major revenue decision announced by my right hon. and learned Friend the Chancellor of the Exchequer, namely, the proposed increase in oil revenue.


Again, it was appropriate that it should be announced now to enable consultations to take place between now and the Budget itself.
None the less, there is now a clear indication that we are seeking to place an emphasis upon revenue as a means of containing borrowing. But, as I say, the full implications of that will be apparent only with the Budget to be pre rented by my right hon. and learned Friend. These measure of necessity, have to come before the House now.
I turn to the Bill itself. A good deal of concern has been expressed about the financing of national insurance benefits — the very philosophy contained in present practice. I am sure that those hon. Members who were present will have been much impressed by the compelling way in which my hon. Friend the Member for Somerset, North (Mr. Dean) traced the background and to some extent the sombre prospects for the financing of welfare.

Mr. Orme: Rubbish.

Mr. Biffen: Although a valedictory "Rubbish" has come from the right hon. Member for Salford, West (Mr. Orme), sedentary noises of that kind validate my judgments rather than confound them.
Naturally enough, a great deal of the discussion turned upon the question of the increase in limits and the burden placed upon employers. The right hon. Member for Salford, West was making a final appearance. It was touching. I am sorry that he is now to give his benefits to industry. I thought that there was already some signs that he was affected by his transfer. Speaking of the burden upon industry, he said that it could be insupportable. Those were the most solemn boss-like words echoing from Tothill Street. I was rather like an up-market edition of Sir Terence Beckett. There was all the sentiment without tie dark threats and abrasive rhetoric.
Although I appreciate what was said about the burden on employers, the matter needs to be kept in perspective. Under the Bill, the total payments by employers will increase by 8 per cent., whereas the payments by employees will increase by 27 per cent. The national insurance surcharge is not within the scope of the Bill, but I am by no means convinced that a remission on the surcharge is self-evidently the most helpful way to benefit industry, because only one-third of that benefit would go to manufacturing industry. which, by general acquiescence, is most adversely affected in the current economic circumstances.
The question of the limits has been discussed a great deal. I appreciate the argument put forward by my hon. Friend the Member for Southampton, Test (Mr. Hill) that, n, use his words, it was unfairly low to have an upper earnings limit of £200. I hope that the hon. Member for Birkenhead will not be too upset if I make a flattering reference to him. He argued cogently for a setting aside, partially if not wholly, of the present upper earnings limit. Only a few years ago, we concluded some consensus about the managing of pensions, including the role that could be provided for the private pensions sector. That was it intimately related to the existence of the upper earnings limit. I should be worried if there was any ending of the degree of bipartisanship that has existed and that has enabled the private pensions sector to exist alongside public pensions.

Mr. Rooker: Does not the Chief Secretary realise that part and parcel of the consensus and bipartisanship that was reached shortly after I came to the House was the requirement for the State retirement pension to be linked to prices or earnings, whichever was the higher? The Government have broken that agreement.

Mr. Biffen: I do not deny that. If the Opposition are now saying that they repudiate the upper earnings limit arrangement—[Interruption.] This matter should not be debated from a sedentary position at 10 minutes to 10 o'clock. There will be future occasions on which to debate the matter. There is to be a new Shadow spokesman. We know that there will be a conscious retreat by the Opposition from consensus politics. If the pension arrangements patiently negotiated over the years are to be torn up as part of a new partisanship, at least we are getting an early warning — [Interruption.] I am delighted to have drawn a certain measure of response from the Opposition, especially from the Front Bench, which, we understand, is known as the only isolated element of moderation left in the Labour Party. I am beginning to be disavowed even of that hopeful thought. If the reaction that has been displayed to my few innocent remarks about the upper earnings limit is to be taken for real and not simply as casual asides late at night, the House had better be informed of that by the new spokesman at the earliest opportunity.
The other matter that has caused considerable controversy is the size of employees' contributions. The decision to make the charge on employees' rates was taken deliberately in the context of altering the relative personal and corporate burden. Furthermore, it does something to remedy the trend that had been moving particularly adversely against employers over recent years. Whereas the ratio of contributions by employers and employees was equal in 1966, the proportion had risen to 1.5:1 against the employer and it will now be returned to 1.25:1
The hon. Member for Isle of Ely (Mr. Freud) said that there is a poverty trap difficulty in what is being proposed. I cannot deny that. It is a subject more suitable to the close, detailed examination that only a Committee stage can provide, but I took note of what the hon. Gentleman said.
The House would do well to ponder how different an employee is, in financial terms, as a taxpayer rather than as a contributor. Too often, it is assumed that we have to compare the income tax status, but that is only part of the story. The employee's contribution has been increased in order to diminish the Treasury contribution, which embraces not only income tax but a range of indirect taxes, many of which are as regressive as income tax is progressive.
The central feature of the Bill is the proposal to drop the Treasury supplement from 18 per cent. to 14½ per cent., which was made possible by the alteration in the employees' rate of contribution. It was supported by my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths), in a delightfully robust speech, and by my hon. Friend the Member for Kensington (Sir B. Rhys Williams). I commend it to my hon. Friends because it plays a major part in reducing the public sector borrowing requirement. As so many of the contributions which are wholly Treasury-financed are among the most rapidly rising in social policy, it seems appropriate that, within national insurance, the Treasury contribution should be adjusted.
The hon. Member for Aberdare (Mr. Evans) made a powerful case with both general and specific application. He will appreciate that I cannot answer the narrow issues concerning his constituent, but, on the general case, he argued that the Welfare State was being undermined by the legislation. That is language which does not adequately describe in any sense what the Bill purports to do.
Although Labour Members may harbour a desire to have substantial departures in policy in respect of social welfare, that would not have been clear from any Opposition Front Bench speech until a few moments ago. After all, the Bill does what successive Governments have done year after year since the national insurance fund was created.

Mr. Ioan Evans: Will the Chief Secretary give way?

Mr. Biffen: No. The Bill seeks the agreement of the House to revise rates and levels in respect of contributions to be payable from next April. That is always done in November and December because of the lead time involved in preparing new rates so that they may come into operation from the following April.
Clause 1 provides for a change in the national insurance earnings limits. That was required by the 1975 legislation. There is now an upper earnings limit of £200 a week. Several hon. Members have commented upon the additional burden that this imposes upon industry. I appreciate that anxiety, but I must point out that the percentage increase being borne by employers has grown rather less than the increase upon employees.
We are back to the principle of how we shall finance standing welfare services. Such a financing technique is a major economic factor. The House should realise just what is implicit in the present expansion Of the benefits being paid for from the national insurance fund. It is expected that benefits in 1981–82 will increase by over 15 per cent. — a sum of £2,300 million. As the House knows, that sum is predominantly devoted to retirement pensions. The present structure of national insurance contributions, with an upper earnings limit related to the level of retirement pension, is broadly accepted. It has the general approval of both sides of the House and the private insurance industry and thus enables the coexistence of the public and private provision of pensions.

Mr. Russell Kerr: That might sound good, but there is no need to repeat it.

Mr. Biffen: It would sound twice as good if repeated, but it would still not impress the hon Member for Feltham and Heston (Mr. Kerr). Whatever time of the afternoon or evening, however late at night, the hon. Gentleman comes in with a cheerful disposition and a closed mind. In many ways the hon. Gentleman represents the most dangerous aspect in British politics—the smiling face of Socialism, as if that were something with which one could coexist. I could call the right hon. Member for Stockton (Mr. Rodgers) to give testimony that that is an illusion that cannot last for long. Behind the smiling face of Socialism is the eternal itch to spend.
My reference to £2,300 million, which has been inscribed carefully on Treasury notepaper, was a matter for some ridicule. It is not a matter for ridicule. Every Opposition Member believes that somehow or other one

can spend without taxing, or that perhaps one can borrow. Under the Labour Government, borrowing rose to over 9½ per cent. of the gross domestic product.
We know that pensions are taken in trust by the present for the future. Value for money — holding faith to money—is the quality above all that one must exercise politically. The Opposition ranks, week in and week out, whether they have smiling or scowling faces, have but one common bond and commitment. It is that they have a programme whose financing is wildly beyond their means. This evening they have shown the first inkling that that fatal trait has been reinforced by the way in which they have reacted to the consensus which hitherto has existed about the upper earnings limit.
On pensions, as on every other aspect of economic policy, we accept the challenge of sound money. We shall champion it and win.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 319, Noes 261

Division No. 12]
[10 pm


AYES


Adley, Robert
Churchill, W. S.


Aitken, Jonathan
Clark, Hon A. (Plym'th, S'n)


Alexander, Richard
Clark, Sir W. (Croydon S)


Alison, Michael
Clarke, Kenneth (Rushcliffe)


Amery, Rt Hon Julian
Clegg, Sir Walter


Ancram, Michael
Cockeram, Eric


Arnold, Tom
Colvin, Michael


Atkins, Rt Hon H.(S'thorne)
Cope, John


Atkins, Robert (Preston N)
Cormack, Patrick


Atkinson, David (B'm'th,E)
Corrie, John


Baker, Kenneth(St.M'bone)
Costain, Sir Albert


Baker, Nicholas (N Dorset)
Cranborne, Viscount


Banks, Robert
Critchley, Julian


Beaumont-Dark, Anthony
Crouch, David


Bell, Sir Ronald
Dean, Paul (North Somerset)


Bendall, Vivian
Dickens, Geoffrey


Benyon, Thomas (A'don)
Dorrell, Stephen


Benyon, W. (Buckingham)
Douglas-Hamilton, Lord J.


Best, Keith
Dover, Denshore


Bevan, David Gilroy
du Cann, Rt Hon Edward


Bitten, Rt Hon John
Dunn, Robert (Dartford)


Biggs-Davison, John
Durant, Tony


Blackburn, John
Dykes, Hugh


Blaker, Peter
Eden, Rt Hon Sir John


Body, Richard
Edwards, Rt Hon N. (P'broke)


Bonsor, Sir Nicholas
Eggar, Tim


Boscawen, Hon Robert
Elliott, Sir William


Bottomley, Peter (W'wich W)
Emery, Peter


Bowden, Andrew
Eyre, Reginald


Boyson, Dr Rhodes
Fairbairn, Nicholas


Braine, Sir Bernard
Fairgrieve, Russell


Bright, Graham
Faith, Mrs Sheila


Brinton, Tim
Farr, John


Brittan, Leon
Fell, Anthony


Brocklebank-Fowler, C.
Fenner, Mrs Peggy


Brooke, Hon Peter
Finsberg, Geoffrey


Brotherton, Michael
Fisher, Sir Nigel


Brown, M. (Brigg and Scun)
Fletcher, A. (Ed'nb'gh N)


Browne, John (Winchester)
Fookes, Miss Janet


Bruce-Gardyne, John
Forman, Nigel


Bryan, Sir Paul
Fowler, Rt Hon Norman


Buck, Antony
Fox, Marcus


Budgen, Nick
Fraser, Rt Hon Sir Hugh


Bulmer, Esmond
Fraser, Peter (South Angus)


Burden, Sir Frederick
Fry, Peter


Butcher, John
Galbraith, Hon T. G. D.


Butler, Hon Adam
Gardiner, George (Reigate)


Cadbury, Jocelyn
Gardner, Edward (S Fylde)


Carlisle, John (Luton West)
Garel-Jones, Tristan


Carlisle, Kenneth (Lincoln)
Glyn, Dr Alan


Chalker, Mrs. Lynda
Goodhew, Victor


Channon, Rt. Hon. Paul
Goodlad, Alastair


Chapman, Sydney
Gorst, John






Gow, Ian
Maude, Rt Hon Angus


Gower, Sir Raymond
Mawby, Ray


Grant, Anthony (Harrow C)
Mawhinney, Dr Brian


Gray, Hamish
Maxwell-Hyslop, Robin


Greenway, Harry
Mayhew, Patrick


Grieve, Percy
Mellor, David


Griffiths, E. (B'y St. Edm'ds)
Meyer, Sir Anthony


Griffiths, Peter Portsm'th N)
Miller, Hal (B'grove)


Grist, Ian
Mills, lain (Meriden)


Gummer. John Selwyn
Mills, Peter (West Devon)


Hamilton, Hon A.
Miscampbell, Norman


Hamilton, Michael (Salisbury)
Mitchell, David (Basingstoke)


Hampson, Dr Keith
Moate, Roger


Hannam, John
Montgomery, Fergus


Haselhurst, Alan
Moore, John


Havers, Rt Hon Sir Michael
Morris, M. (N'hampton S)


Hawkins, Paul
Morrison, Hon C. (Devizes)


Hawksley, Warren
Morrison, Hon P. (Chester)


Hayhoe, Barney
Myles, David


Heath, Rt Hon Edward
Neale, Gerrard


Heddle, John
Needham, Richard


Henderson, Barry
Nelson, Anthony


Heseltine, Rt Hon Michael
Neubert, Michael


Hicks, Robert
Newton, Tony


Higgins, Rt Hon Terence L.
Normanton, Tom


Hill, James
Nott, Rt Hon John


Hogg, Hon Douglas (Gr'th'm)
Onslow, Cranley


Holland, Philip (Carlton)
Oppenheim, Rt Hon Mrs S.


Hooson, Tom
Osborn, John


Hordern, Peter
Page, John (Harrow, West)


Howe, Rt Hon Sir Geoffrey
Page, Rt Hon Sir G. (Crosby)


Howell, Ralph (N Norfolk)
Page, Richard (SW Herts)


Hunt, David (Wirral)
Parkinson, Cecil


Hunt, John (Ravensbourne)
Parris, Matthew


Hurd, Hon Douglas
Patten, Christopher (Bath)


Irving, Charles (Cheltenham)
Patten, John (Oxford)


Jenkin, Rt Hon Patrick
Pattie, Geoffrey


Jessel, Toby
Pawsey, James


Johnson Smith, Geoffrey
Percival, Sir Ian


Jopling, Rt Hon Michael
Peyton, Rt Hon John


Joseph, Rt Hon Sir Keith
Pink, R. Bonner


Kaberry. Sir Donald
Pollock, Alexander


Kellett-Bowman, Mrs Elaine
Prentice, Rt Hon Rug


Kershaw, Anthony
Price, Sir David (Eastleigh)


Kimball, Marcus
Prior, Rt Hon James


King, Rt Hon Tom
Proctor, K. Harvey


Kitson, Sir Timothy
Raison, Timothy


Knight, Mrs Jill
Rathbone, Tim


Knox, David
Rees, Peter (Dover and Deal)


Lamont, Norman
Rees-Davies, W. R.


Lang, Ian
Renton, Tim


Langford Holt Sir John
Rhodes James, Robert


Latham, Michael
Rhys Williams, Sir Brandon


Lawrence, Ivan
Ridley, Hon Nicholas


Lawson, Nigel
Ridsdale, Julian


Lee, John
Rifkind. Malcolm


Lennox-Boyd, Hon Mark
Rippon, Rt Hon Geoffrey


Lester Jim (Beeston)
Roberts, M. (Cardiff NW)


Lewis, Kenneth (Rutland)
Roberts, Wyn (Conway)


Lloyd, Ian (Havant &amp; W'loo)
Rossi, Hugh


Lloyd, Peter (Fareham)
Rost, Peter


Loveridge, John
Royle, Sir Anthony


Luce, Richard
Sainsbury, Hon Timothy


Lyell, Nicholas
St. John-Stevas, Rt Hon N.


McCrindle Robert
Scott, Nicholas


Macfarlane, Neil
Shaw, Giles (Pudsey)


MacGregor, John
Shaw, Michael (Scarborough)


MacKay, John (Argyll)
Shelton, William (Streatham)


Macmillan, Rt Hon M.
Shepherd, Colin (Hereford)


McNair-Wilson, M. (N'bury)
Shepherd, Richard


McNair-Wilson, P. (New F'st)
Shersby, Michael


McQuarrie, Albert
Silvester, Fred


Madel, David
Sims, Roger


Major, John
Skeet, T. H. H.


Marland, Paul
Smith, Dudley


Marlow, Tony
Speed, Keith


Marshall Michael (Arundel)
Speller, Tony


Marten, Neil (Banbury)
Spence, John


Mates, Michael
Spicer, Jim (West Dorset)


Mather, Carol
Spicer, Michael (S Worcs)





Sproat, Ian
Wakeham, John


Squire, Robin
Waldegrave, Hon William


Stainton, Keith
Walker, Rt Hon P.(W'cester)


Stanbrook, Ivor
Walker, B. (Perth)


Stanley, John
Walker-Smith, Rt Hon Sir D.


Steen, Anthony
Wall, Patrick


Stevens, Martin
Waller, Gary


Stewart, Ian (Hitchin)
Walters, Dennis.


Stewart, J.(E Renfrewshire)
Ward, John


Stokes, John
Warren, Kenneth


Stradling Thomas, J.
Watson, John


Tapsell, Peter
Wells, John (Maidstone)


Taylor, Robert (Croydon NW)
Wells, Bowen


Taylor, Teddy (S'end E)
Wheeler, John


Tebbit, Norman
Whitelaw, Rt Hon William


Temple-Morris, Peter
Whitney, Raymond


Thatcher, Rt Hon Mrs M.
Wickenden, Keith


Thomas, Rt Hon Peter
Wiggin, Jerry


Thompson, Donald
Wilkinson, John


Thorne, Neil (Ilford South)
Williams, D.(Montgomery)


Thornton, Malcolm
Winterton, Nicholas,


Townend, John (Bridlington)
Wolfson, Mark


Townsend, Cyril D, (B'heath)
Young, Sir George (Acton)


Trippier, David
Younger, Rt Hon George


Trotter, Neville



van Straubenzee, W. R.
Tellers for the Ayes:


Vaughan, Dr Gerard
Mr. Spencer Le Marchant


Viggers, Peter
and Mr. Anthony Berry.


Waddington, David





NOES


Abse, Leo
Davidson, Arthur


Adams, Allen
Davies, Rt Hon Denzil (L'lli)


Allaun, Frank
Davies, Ifor (Gower)


Alton, David
Davis, Clinton (Hackney C)


Anderson, Donald
Deakins, Eric


Archer, Rt Hon Peter
Dean, Joseph (Leeds West)


Armstrong, Rt Hon Ernest
Dempsey, James


Ashley, Rt Hon Jack
Dewar, Donald


Ashton, Joe
Dixon, Donald


Atkinson, N.(H'gey,)
Dobson, Frank


Bagier, Gordon A.T.
Dormand, Jack


Barnett, Guy (Greenwich)
Douglas, Dick


Barnett, Rt Hon Joel (H'wd)
Dubs, Alfred


Benn, Rt Hon A. Wedgwood
Duffy, A. E. P.


Bennett, Andrew (St'kp't N)
Dunn, James A.


Bidwell, Sydney
Dunnett, Jack


Booth, Rt Hon Albert:
Dunwoody, Hon Mrs G.


Boothroyd, Miss Betty
Eadie, Alex


Bottomley, Rt Hon A.(M'b'ro)
Eastham, Ken


Bradley, Tom
Edwards, R. (W'hampt'n S E)


Bray, Dr Jeremy
Ellis, R. (NE D'bysh're)


Brown, Hugh D. (Proven)
Ellis, Tom (Wrexham)


Brown, R. C. (N'castle W)
English, Michael


Brown, Ron (E'burgh, Leith)
Ennals, Rt Hon David


Brown, Ronald W. (H'ckn'y S)
Evans, loan (Aberdare)


Buchan, Norman
Ewing, Harry


Callaghan, Jim (Midd't'n &amp; P)
Faulds, Andrew


Campbell, Ian
Field, Frank


Campbell-Savours, Dale
Fitch, Alan


Canavan, Dennis
Flannery, Martin


Cant, R. B.
Fletcher, Raymond (Ilkeston)


Carmichael, Neil
Fletcher, led (Darlington)


Carter-Jones, Lewis
Foot, Rt Hon Michael


Cartwright, John
Ford, Ben


Cocks, Rt Hon M. (B'stol S)
Forrester, John


Cohen, Stanley
Foster, Derek


Coleman, Donald
Foulkes, George


Concannon, Rt Hon J. D.
Fraser, J. (Lamb'th, N'w'd)


Conlan, Bernard
Freeson, Rt Hon Reginald


Cook, Robin F.
Freud, Clement


Cowans, Harry
Garrett, John (Norwich S)


Cox, T. (W'dsw'th, Toot'g)
Garrett, W. E. (Wallsend)


Craigen, J. M.
George, Bruce


Crowther, J. S.
Gilbert, Rt Hon Dr John


Cryer, Bob
Ginsburg, David


Cunliffe, Lawrence
Golding, John


Cunningham, G. (Islington S)
Gourlay, Harry


Cunningham, Dr J. (W'h'n)
Graham, Ted


Dalyell, Tarn
Grant, George (Morpeth)






Grant, John (Islington C)
Orme, Rt Hon Stanley


Grimond, Rt Hon J.
Palmer, Arthur


Hamilton, James (Bothwell)
Park, George


Hamilton, W. W. (C'tral Fife)
Parker, John


Hardy, Peter
Parry, Robert


Harrison, Rt Hon Walter
Pavitt, Laurie


Hart, Rt Hon Dame Judith
Pendry, Tom


Hattersley, Rt Hon Roy
Penhaligon, David


Haynes, Frank
Powell, Raymond (Ogmore)


Healey, Rt Hon Denis
Prescott, John


Heffer, Eric S.
Price, C. (Lewisham W)


Hogg, N. (E Dunb't'nshire)
Race, Reg


Holland, S. (L'b'th, Vauxh'll)
Radice, Giles


Home Robertson, John
Rees, Rt Hon M (Leeds S)


Homewood, William
Richardson, Jo


Hooley, Frank
Roberts, Albert (Normanton)


Horam, John
Roberts, Allan (Bootle)


Howell, Rt Hon D.
Roberts, Ernest (Hackney N)


Howells, Geraint
Roberts, Gwilym (Cannock)


Huckfield, Les
Robertson, George


Hudson Davies, Gwilym E.
Robinson, G. (Coventry NW)


Hughes, Mark (Durham)
Rodgers, Rt Hon William


Hughes, Robert (Aberdeen N)
Rooker, J. W.


Hughes, Roy (Newport)
Roper, John


Janner, Hon Greville
Ross, Ernest (Dundee West)


Jay, Rt Hon Douglas
Ross, Stephen (Isle of Wight)


John, Brynmor
Rowlands, Ted


Johnson, James (Hull West)
Ryman, John


Johnson, Walter (Derby S)
Sandelson, Neville


Jones, Rt Hon Alec (Rh'dda)
Sever, John


Jones, Barry (East Flint)
Sheerman, Barry


Jones, Dan (Burnley)
Sheldon, Rt Hon R.


Kerr, Russell
Shore, Rt Hon Peter


Kilroy-Silk, Robert
Short, Mrs Renée


Kinnock, Neil
Silkin, Rt Hon J. (Deptford)


Lambie, David
Silkin, Rt Hon S. C. (Dulwich)


Lamborn, Harry
Silverman, Julius


Leadbitter, Ted
Smith, Rt Hon J. (N Lanark)


Leighton, Ronald
Snape, Peter


Lestor, Miss Joan
Soley, Clive


Lewis, Arthur (N'ham NW)
Spearing, Nigel


Lewis, Ron (Carlisle)
Spriggs, Leslie


Litherland, Robert
Stallard, A. W.


Lofthouse, Geoffrey
Steel, Rt Hon David


Lyon, Alexander (York)
Stewart, Rt Hon D. (W Isles)


Lyons, Edward (Bradf'd W)
Stoddart, David


Mabon, Rt Hon Dr J. Dickson
Stott, Roger


McDonald, Dr Oonagh
Strang, Gavin


McGuire, Michael (Ince)
Straw, Jack


McKay, Allen (Penistone)
Summerskill, Hon Dr Shirley


McKelvey, William
Taylor, Mrs Ann (Bolton W)


MacKenzie, Rt Hon Gregor
Thomas, Dafydd (Merioneth)


Maclennan, Robert
Thomas, Jeffrey (Abertillery)


McNally, Thomas
Thomas, Mike (Newcastle E)


McTaggart, Robert
Thomas, Dr R. (Carmarthen)


McWilliam, John
Thorne, Stan (Preston South)


Marks, Kenneth
Tilley, John


Marshall, Dr Edmund (Goole)
Tinn, James


Marshall, Jim (Leicester S)
Torney, Tom


Martin, M(G'gow S'burn)
Varley, Rt Hon Eric G.


Mason, Rt Hon Roy
Wainwright, E.fDearne V)


Maxton, John
Wainwright, R.(Colne V)


Maynard, Miss Joan
Walker, Rt Hon H. (D'caster)


Meacher, Michael
Watkins, David


Mellish, Rt Hon Robert
Weetch, Ken


Mikardo, Ian
Welsh, Michael


Millan, Rt Hon Bruce
White, Frank R.


Miller, Dr M. S. (E Kilbride)
White, J. (G'gow Pollok)


Mitchell, Austin (Grimsby)
Whitehead, Phillip


Mitchell, R. C. (Soton Itchen)
Whitlock, William


Morris, Rt Hon A. (W'shawe)
Wigley, Dafydd


Morris, Rt Hon C. (O'shaw)
Willey, Rt Hon Frederick


Morris, Rt Hon J. (Aberavon)
Williams, Rt Hon A.(S'sea W)


Morton, George
Williams, Sir T.(W'ton)


Moyle, Rt Hon Roland
Wilson, Gordon (Dundee E)


Mulley, Rt Hon Frederick
Wilson, Rt Hon Sir H.(H'ton)


Newens, Stanley
Wilson, William (C'try SE)


Ogden, Eric
Winnick, David


O'Halloran, Michael
Woodall, Alec


O'Neill, Martin
Woolmer, Kenneth





Wrigglesworth, Ian
Tellers for the Noes:


Young, David (Bolton E)
Mr. Terry Davis and



Mr. Hugh McCartney.

Question accordingly agreed to.

Bill read a Second time.

Motion made and Question put, That the Bill be committed to a Committee of the whole House.—[Mr. Wakeham.]

The House divided: Ayes 317, Noes 262.

Division No. 13]
[10.13 pm


AYES


Adley, Robert
Dickens, Geoffrey


Aitken, Jonathan
Dorrell, Stephen


Alexander, Richard
Douglas-Hamilton, Lord J.


Alison, Michael
Dover, Denshore


Ancram, Michael
du Cann, Rt Hon Edward


Arnold, Tom
Dunn, Robert (Dartford)


Atkins, Rt Hon H.(S'thorne)
Durant, Tony


Atkins, Hobert (Preston N)
Dykes, Hugh


Atkinson, David (B'm'th,E)
Eden, Rt Hon Sir John


Baker, Kenneth(St.M'bone)
Edwards, Rt Hon N. (P'broke)


Baker, Nicholas (N Dorset)
Eggar, Tim


Banks, Robert
Elliott, Sir William


Beaumont-Dark, Anthony
Emery, Peter


Bell, Sir Ronald
Eyre, Reginald


Bendall, Vivian
Fairbairn, Nicholas


Benyon, Thomas (A'don)
Fairgrieve, Russell


Benyon, W. (Buckingham)
Faith, Mrs Sheila


Best, Keith
Farr, John


Bevan, David Gilroy
Fell, Anthony


Biffen, Rt Hon John
Fenner, Mrs Peggy


Biggs-Davison, John
Finsberg, Geoffrey


Blackburn, John
Fisher, Sir Nigel


Blaker, Peter
Fletcher, A. (Ed'nb'gh N)


Body, Richard
Fookes, Miss Janet


Bonsor, Sir Nicholas
Forman, Nigel


Boscawen, Hon Robert
Fowler, Rt Ron Norman


Bottomley, Peter (W'wich W)
Fox, Marcus


Bowden, Andrew
Fraser, Rt Hon Sir Hugh


Boyson, Dr Rhodes
Fraser, Peter (South Angus)


Braine, Sir Bernard
Fry, Peter


Bright, Graham
Galbraith, Hon T. G. D.


Brinton, Tim
Gardiner, George (Reigate)


Brittan, Leon
Gardner, Edward (S Fylde)


Brocklebank-Fowler, C.
Garel-Jones, Tristan


Brooke, Hon Peter
Glyn, Dr Alan


Brotherton, Michael
Goodhew, Victor


Brown, M. (Brigg and Scun)
Goodlad, Alastair


Browne, John (Winchester)
Gorst, John


Bruce-Gardyne, John
Gow, Ian


Bryan, Sir Paul
Gower, Sir Raymond


Buck, Antony
Grant, Anthony (Harrow C)


Budgen, Nick
Gray, Hamish


Bulmer, Esmond
Greenway, Harry


Burden, Sir Frederick
Grieve, Percy


Butcher, John
Griffiths, E.(B'y St. Edm'ds)


Butler, Hon Adam
Griffiths, Peter Portsm'th N)


Cadbury, Jocelyn
Grist, Ian


Carlisle, John (Luton West)
Gummer, John Selwyn


Carlisle, Kenneth (Lincoln)
Hamilton, Hon A.


Chalker, Mrs. Lynda
Hamilton, Michael (Salisbury)


Channon, Rt. Hon. Paul
Hampson, Dr Keith


Chapman, Sydney
Hannam, John


Churchill, W. S.
Haselhurst, Alan


Clark, Hon A. (Plym'th, S'n)
Havers, Rt Hon Sir Michael


Clark, Sir W. (Croydon S)
Hawkins, Paul


Clarke, Kenneth (Rushcliffe)
Hawksley, Warren


Clegg, Sir Walter
Hayhoe, Barney


Cockeram, Eric
Heath, Rt Hon Edward


Colvin, Michael
Heddle, John


Cope, John
Henderson, Barry


Corrie, John
Heseltine, Rt Hon Michael


Costain, Sir Albert
Hicks, Robert


Cranborne, Viscount
Higgins, Rt Hon Terence L.


Critchley, Julian
Hill, James


Crouch, David
Hogg, Hon Douglas (Gr'th'm)


Dean, Paul (North Somerset)
Holland, Philip (Carlton)






Hooson, Tom
Osborn, John


Hordern, Peter
Page, John (Harrow, West)


Howe, Rt Hon Sir Geoffrey
Page, Rt Hon Sir G. (Crosby)


Howell, Ralph (N Norfolk)
Page, Richard (SW Herts)


Hunt, David (Wirral)
Parkinson, Cecil


Hunt, John (Ravensbourne)
Parris, Matthew


Kurd, Hon Douglas
Patten, Christopher (Bath)


Irving, Charles (Cheltenham)
Patten, John (Oxford)


Jenkin, Rt Hon Patrick
Pattie, Geoffrey


Jessel, Toby
Pawsey, James


Johnson Smith, Geoffrey
Percival, Sir Ian


Jopling, Rt Hon Michael
Peyton, Rt Hon John


Joseph, Rt Hon Sir Keith
Pink, R. Bonner


Kaberry, Sir Donald
Pollock;, Alexander


Kellett-Bowman, Mrs Elaine
Prentice, Rt Hon Rag


Kershaw, Anthony
Price, Sir David (Eastleigh)


Kimball, Marcus
Prior, Rt Hon James


King, Rt Hon Tom
Proctor, K. Harvey


Kitson, Sir Timothy
Raison, Timothy


Knight, Mrs Jill
Rathbone, Tim


Knox, David
Rees, Peter (Dover and Deal)


Lamont, Norman
Rees-Davies, W. R.


Lang, Ian
Renton, Tim


Langford-Holt, Sir John
Rhodes James, Robert


Latham, Michael
Rhys Williams, Sir Brandon


Lawrence, Ivan
Ridley, Hon Nicholas


Lawson, Nigel
Ridsdale, Julian


Lee, John
Rifkind, Malcolm


Lennox-Boyd, Hon Mark
Rippon, Rt Hon Geoffrey


Lester Jim (Beeston)
Roberts, M. (Cardiff NW)


Lewis, Kenneth (Rutland)
Roberts, Wyn (Conway)


Lloyd, Ian (Havant &amp; W'loo)
Rossi, Hugh


Lloyd, Peter (Fareham)
Rost, Peter


Loveridge, John
Royle, Sir Anthony


Luce, Richard
Sainsbury, Hon Timothy


Lyell, Nicholas
St John-Steves, Rt Hon N.


McCrindlo, Robert
Scott, Nicholas


Macfarlane, Neil
Shaw, Giles (Pudsey)


MacGregor, John
Shaw, Michael (Scarborough)


MacKay, John (Argyll)
Shelton, William (Streatham)


Macmillan, Rt Hon M.
Shephord, Colin (Hereford)


McNair-Wilson, M. (N'bury)
Shephord, Richard


McNair-Wilson, P. (New F'st)
Shersby, Michael


McQuarrie, Albert
Silvester, Fred


Madel, David
Sims, Roger


Major, John
Skeet, T. H. H.


Marland, Paul
Smith, Dudley


Marlow, Tony
Speed, Keith


Marshall Michael (Arundel)
Speller, Tony


Marten, Neil (Banbury)
Spence, John


Mates, Michael
Spicer, Jim (West Dorset)


Mather, Carol
Spicer, Michael (S Worcs)


Maude, Rt Hon Angus
Sproat, Ian


Mawby, Ray
Squire, Robin


Mawhinney, Dr Brian
Stainton, Keith


Maxwell-Hyslop, Robin
Stanbrook, Ivor


Mayhew, Patrick
Stanley, John


Mellor, David
Steen, Anthony


Meyer, Sir Anthony
Stevens, Martin


Miller, Hal (B'grove)
Stewart, Ian (Hitchin)


Mills, Iain (Meriden)
Stewait, J.(E Renfrewshire)


Mills, Peter (West Devon)
Stokes, John


Miscamphell, Norman
Stradling Thomas, J.


Mitchell, David (Basingstoke)
Tapsell, Peter


Moate, Roger
Taylor, Robert (Croydon NW)


Montgomery, Fergus
Taylor, Teddy (S'end E)


Moore, John
Tebbit, Norman


Morris, M. (N'hampton S)
Temple-Morris, Peter


Morrison, Hon C. (Devizes)
Thatcher, Rt Hon Mrs M.


Morrison, Hon P (Chester)
Thomas, Rt Hon Peter


Myles, David
Thompson, Donald


Neale, Gerrard
Thorne, Neil (Ilford South)


Needham, Richard
Thornton, Malcolm


Nelson, Anthony
Townend, John (Bridlington)


Neubert, Michael
Townsend, Cyril D. (B'heath)


Newton, Tony
Trippier, David


Normanton, Tom
Trotter, Neville


Nott, Rt Hon John
van Stiaubenzee, W. R.


Onslow, Cranley
Vaughan, Dr Gerard


Oppenheim, Rt Hon Mrs S.
Viggers, Peter





Waddington, David
Whitelaw, Rt Hon William


Wakeham, John
Whitney, Raymond


Waldegrave, Hon William
Wickenden, Keith


Walker, Rt Hon P.(W'cester)
Wiggin, Jerry


Walker, B. (Perth )
Wilkinson, John


Walker-Smith, Rt Hon Sir D.
Williams, D. (Montgomery)


Wall, Patrick
Wintertori, Nicholas


Waller, Gary
Wolfson, Mark


Walters, Dennis
Young, Sir George (Acton)


Ward, John
Younger, Rt Hon George


Warren, Kenneth



Watson, John
Tellers for the Ayes:


Wells, John (Maidstone)
Mr. Spencer Le Marchant and


Wells, Bowen
Mr. Anthony Berry.


Wheeler, John





NOES


Abse, Leo
Dunn, James A.


Adams, Allen
Dunnett, Jack


Allaun, Frank
Dunwoody, Hon Mrs G.


Alton, David
Eadie, Alex


Anderson, Donald
Eastham, Ken


Archer, Rt Hon Peter
Edwards, R. (W'hampt'n S E)


Armstrong, Rt Hon Earnest
Ellis, R. (NE D'bysh're)


Ashley, Rt Hon Jack
Ellis, Tom (Wrexham)


Ashton, Joe
English, Michael


Atkinson, N.(H'gey,)
Ennals, Rt Hon David


Bagier, Gordon A.T.
Evans, Ioan (Aberdare)


Barnett, Guy (Greenwich)
Ewing, Harry


Barnett, Rt Hon Joel (H'wd)
Faulds, Andrew


Benn, Rt Hon A. Wedgwood
Field, Frank


Bennett, Andrew (St'kp't N)
Fitch, Alan


Bidwell, Sydney
Flannery, Martin


Booth, Rt Hon Albert
Fletcher, Raymond (Ilkeston)


Boothroyd, Miss Betty
Fletcher, Ted (Darlington)


Bottomley, Rt Hon A.(M'b'ro)
Foot, Rt Hon Michael


Bradley, Tom
Ford, Ben


Bray, Dr Jeremy
Forrester, John


Brown, Hugh D. (Provan)
Foster, Derek


Brown, R. C. (N'castle W)
Foulkes, George


Brown, Ron (E' burgh, Leith)
Fraser, J. (Lamb'th, N'w'd)


Brown, Ronald W. (H'ckn'y S)
Freeson, Rt Hon Reginald


Buchan, Norman
Freud, Clement


Callaghan, Jim (Midd't'n &amp; P)
Garrett, John (Norwich S)


Campbell, Ian
Garrett, W. E. (Wallsend)


Campbell-Savours, Dale
George, Bruce


Canavan, Dennis
Gilbert, Rt Hon Dr John


Cant, R. B.
Ginsburg, David


Carmichael, Neil
Golding, John


Carter-Jones, Lewis
Gourlay, Harry


Cartwright, John
Graham, Ted


Clark, Dr David (S Shields)
Grant, George (Morpeth)


Cocks, Rt Hon M. (B'stol S)
Grant, John (Islington C)


Cohen, Stanley
Grimond, Rt Hon J.


Concannon, Rt Hon J. D.
Hamilton, James (Bothwell)


Conlan, Bernard
Hamilton, W. W. (C'tral Fife)


Cook, Robin F.
Hardy, Peter


Cowans, Harry
Harrison, Rt Hon Walter


Cox, T. (W'dsw'th, Toot'g)
Hart, Rt Hon Dame Judith


Craigen, J. M.
Hattersley, Rt Hon Roy


Crowther, J. S.
Haynes, Frank


Cryer, Bob
Healey, Rt Hon Denis


Cunliffe, Lawrence
Heffer, Eric S.


Cunningham, G. (Islington S)
Hogg, N. (E Dunb't'nshire)


Cunningham, Dr J. (W'h'n)
Holland, B. (L'b'th, Vauxh'll)


Dalyell, Tarn
Home Robertson, John


Davidson, Arthur
Homewood, William


Davies, Rt Hon Denzil (L'lli)
Hooley, Frank


Davies, Ifor (Gower)
Horam, John


Davis, Clinton (Hackney C)
Howell, Rt Hon D.


Davis, T. (B'ham, Stechf'd)
Howells, Geraint


Deakins, Eric
Huckfield Les


Dempsey, James
Hudson Cavies, Gwilym E.


Dewar, Donald
Hughes, Mark (Durham)


Dixon, Donald
Hughes, Robert (Aberdeen N)


Dobson, Frank
Hughes, Roy (Newport)


Dormand, Jack
Janner, Hon Greville


Douglas, Dick
Jay, Rt Hon Douglas


Dubs, Alfred
John, Brynmor


Duffy, A. E. P.
Johnson, James (Hull West)






Johnson, Walter (Derby S)
Roberts, Allan (Bootle)


Jones, Rt Hon Alec (Rh'dda)
Roberts, Ernest (Hackney N)


Jones, Barry (East Flint)
Roberts, Gwilym (Cannock)


Jones, Dan (Burnley)
Robertson, George


Kerr, Russell
Robinson, G. (Coventry NW)


Kilroy-Silk, Robert
Rodgers, Rt Hon William


Kinnock, Neil
Rooker, J. W.


Lambie, David
Roper, John


Lamborn, Harry
Ross, Ernest (Dundee West)


Leadbitter, Ted
Ross, Stephen (Isle of Wight)


Leighton, Ronald
Rowlands, Ted


Lestor, Miss Joan
Sandelson, Neville


Lewis, Arthur (N'ham NW)
Sever, John


Lewis, Ron (Carlisle)
Sheerman, Barry


Litherland, Robert
Sheldon, Rt Hon R.


Lofthouse, Geoffrey
Shore, Rt Hon Peter


Lyon, Alexander (York)
Short, Mrs Renee


Lyons, Edward (Bradf'd W)
Silkin, Rt Hon J. (Deptford)


Mabon, Rt Hon Dr J. Dickson
Silkin, Rt Hon S. C. (Dulwich)


McCartney, Hugh
Silverman, Julius


McDonald, Dr Oonagh
Smith, Rt Hon J. (N Lanark)


McGuire, Michael (Ince)
Snape, Peter


McKay, Allen (Penistone)
Soley, Clive


McKelvey, William
Spearing, Nigel


MacKenzie, Rt Hon Gregor
Spriggs, Leslie


Maclennan, Robert
Stallard, A. W.


McNally, Thomas
Steel, Rt Hon David


McTaggart, Robert
Stewart, Rt Hon D. (W Isles)


McWilliam, John
Stoddart, David


Marks, Kenneth
Stott, Roger


Marshall, Dr Edmund (Goole)
Strang, Gavin


Marshall, Jim (Leicester S)
Straw, Jack


Martin, M (G'gow S'burn)
Summerskill, Hon Dr Shirley


Mason, Rt Hon Roy
Taylor, Mrs Ann (Botton W)


Maxton, John
Thomas, Dafydd (Merioneth)


Maynard, Miss Joan
Thomas, Jeffrey (Abertillery)


Meacher, Michael
Thomas, Mike (Newcastle E)


Mellish, Rt Hon Robert
Thomas, Dr R. (Carmarthen)


Mikardo, Ian
Thome, Stan (Preston South)


Millan, Rt Hon Bruce
Tilley, John


Miller, Dr M. S. (E Kilbride)
Tinn, James


Mitchell, Austin (Grimsby)
Torney, Tom


Mitchell, R. C. (Soton Itchen)
Varley, Rt Hon Eric G.


Morris, Rt Hon A. (W'shawe)
Wainwright, E.(Dearne V)


Morris, Rt Hon C. (O'shaw)
Wainwright, R. (Colne V)


Morris, Rt Hon J. (Aberavon)
Walker, Rt Hon H.(D'caster)


Morton, George
Watkins, David


Moyle, Rt Hon Roland
Weetch, Ken


Mulley, Rt Hon Frederick
Welsh, Michael


Newens, Stanley
White, Frank R.


Oakes, Rt Hon Gordon
White, J. (G'gow Pollok)


Ogden, Eric
Whitehead, Phillip


O'Halloran, Michael
Whitlock, William


O'Neill, Martin
Wigley, Dafydd


Orme, Rt Hon Stanley
Willey, Rt Hon Frederick


Palmer, Arthur
Williams, Rt Hon A. (S'sea W)


Park, George
Williams, Sir J.(W'ton)


Parker, John
Wilson, Gordon (Dundee E)


Parry, Robert
Wilson, Rt Hon Sir H.(H'ton)


Pavitt, Laurie
Wilson, William (C'try SE)


Pendry, Tom
Winnick, David


Penhaligon, David
Woodall, Alec


Powell, Raymond (Ogmore)
Woolmer, Kenneth


Prescott, John
Wrigglesworth, Ian


Price, C. (Lewisham W)
Young, David (Bolton E)


Race, Reg



Radice, Giles
Tellers for the Noes:


Rees, Rt Hon M (Leeds S)
Mr. Dennis Coleman and


Richardson, Jo
Mr. Joseph Dean.


Roberts, Albert (Normanton)

Question accordingly agreed to.

Bill committed to a Committee of the whole House.

Committee tomorrow.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,

That, at this day's sitting, the Motion relating to Ways and Means may be proceeded with, though opposed, until any hour. —[Mr. Wakeham.]

Orders of the Day — SOCIAL SECURITY (CONTRIBUTIONS) [MONEY]

Queen's Recommendation having been signified—

Motion made, and Question put,
That for the purposes of any Act of the present Session to make provision in connection with certain contributions payable under the Social Security Act 1975, it is expedient to authorise the payment out of money provided by Parliament of any increase in the amount payable by way of Treasury supplement under section 1(5) of the Social Security Act 1975 attributable to any provision of the said Act of the present Session giving power by order to alter the percentage by reference to which the amount of that supplement is calculated.—[Mr. Patrick Jenkin.]

The House divided: Ayes 313, Noes 257.

Division No. 14]
[10.26 pm


AYES


Adley, Robert
Corrie, John


Aitken, Jonathan
Costain, Sir Albert


Alexander, Richard
Cranborne, Viscount


Alison, Michael
Critchley, Julian


Ancram, Michael
Crouch, David


Arnold, Tom
Dean, Paul (North Somerset)


Atkins, Rt Hon H.(S'thorne)
Dickens, Geoffrey


Atkins, Robert (Preston N)
Dorrell, Stephen


Atkinson, David (B'm'th,E)
Douglas-Hamilton, Lord J.


Baker, Kenneth(St.M'bone)
Dover, Denshore


Baker, Nicholas (N Dorset)
du Cann, Rt Hon Edward


Banks, Robert
Dunn, James A.


Beaumont-Dark, Anthony
Durant, Tony


Bell, Sir Ronald
Dykes, Hugh


Bendall, Vivian
Eden, Rt Hon Sir John


Benyon, Thomas (A'don)
Edwards, Rt Hon N. (P'broke)


Benyon, W. (Buckingham)
Eggar, Tim


Best, Keith
Elliott, Sir William


Bevan, David Gilroy
Emery, Peter


Biffen, Rt Hon John
Eyre, Reginald


Biggs-Davison, John
Fairbaim, Nicholas


Blackburn, John
Fairgrieve, Russell


Blaker, Peter
Faith, Mrs Sheila


Body, Richard
Farr, John


Bonsor, Sir Nicholas
Fell, Anthony


Boscawen, Hon Robert
Fenner, Mrs Peggy


Bottom ley, Peter (W'wich W)
Finsberg, Geoffrey


Bowden, Andrew
Fisher, Sir Nigel


Boyson, Dr Rhodes
Fletcher, A. (Ed'nb'gh N)


Braine, Sir Bernard
Fookes, Miss Janet


Bright, Graham
Forman, Nigel


Brinton, Tim
Fowler, Rt Hon Norman


Brittan, Leon
Fox, Marcus


Brocklebank-Fowler, C.
Fraser, Rt Hon Sir Hugh


Brooke, Hon Peter
Fraser, Peter (South Angus)


Brotherton, Michael
Fry, Peter


Brown, Michael (Brigg &amp; Sc'n)
Galbraith, Hon T. G. D.


Browne, John (Winchester)
Gardiner, George (Reigate)


Bruce-Gardyne, John
Gardner, Edward (S Fylde)


Bryan, Sir Paul
Garel-Jones, Tristan


Buck, Antony
Glyn, Dr Alan


Budgen, Nick
Good hew, Victor


Bulmer, Esmond
Goodlad, Alastair


Burden, Sir Frederick
Gorst, John


Butler, Hon Adam
Gow, Ian


Cad bury, Jocelyn
Gower, Sir Raymond


Carlisle, John (Luton West)
Grant, Anthony (Harrow C)


Carlisle, Kenneth (Lincoln)
Gray, Hamish


Chalker, Mrs. Lynda
Greenway, Harry


Channon, Rt. Hon. Paul
Grieve, Percy


Chapman, Sydney
Griffiths, Peter Portsm'th N)


Churchill, W. S.
Grist, Ian


Clark, Hon A. (Plym'th, S'n)
Gummer, John Selwyn


Clark, Sir W. (Croydon S)
Hamilton, Hon A.


Clarke, Kenneth (Rushcliffe)
Hamilton, Michael (Salisbury)


Clegg, Sir Walter
Hampson, Dr Keith


Cockeram, Eric
Hannam, John


Colvin, Michael
Haselhurst, Alan


Cope, John
Havers, Rt Hon Sir Michael






Hawkins, Paul
Morrison, Hon P. (Chester)


Hawksley, Warren
Myles, David


Heath, Rt Hon Edward
Neale, Gerrard


Heddle, John
Needham, Richard


Henderson, Barry
Nelson, Anthony


Heseltine, Rt Hon Michael
Neubert, Michael


Hicks, Robert
Newton, Tony


Higgins, Rt Hon Terence L.
Normanton, Tom


Hill, James
Nott, Rt Hon John


Hogg, Hon Douglas (Gr'th'm)
Onslow, Cranley


Holland, Philip (Carlton)
Oppenheim, Rt Hon Mrs S.


Hooson, Tom
Osborn, John


Hordern, Peter
Page, John (Harrow, West)


Howe, Rt Hon Sir Geoffrey
Page, Rt Hon Sir G. (Crosby)


Howell, Ralph (N Norfolk)
Page, Richard (SW Herts)


Hunt, David (Wirral)
Parkinson, Cecil


Hunt, John (Ravensbourne)
Parris, Matthew


Hurd, Hon Douglas
Patten, Christopher (Bath)


Irving, Charles (Cheltenham)
Patten, John (Oxford)


Jenkin, Rt Hon Patrick
Pattie, Geoffrey


Jessel, Toby
Pawsey, James


Johnson Smith, Geoffrey
Percival, Sir Ian


Jopling, Rt Hon Michael
Peyton, Rt Hon John


Joseph, Rt Hon Sir Keith
Pink, R. Bonner


Kaberry, Sir Donald
Pollock, Alexander


Kellett-Bowman, Mrs Elaine
Prentice, Rt Hon Reg


Kershaw, Anthony
Price, Sir David (Eastleigh)


Kimball, Marcus
Prior, Rt Hon James


King, Rt Hon Tom
Proctor, K. Harvey


Kitson, Sir Timothy
Raison, Timothy


Knight, Mrs Jill
Rathbone, Tim


Knox, David
Rues, Peter (Dover and Deal)


Lamont, Norman
Roes-Davies, W. R.


Lang, Ian
Renton, Tim


Langford-Holt, Sir John
Rhodes James, Robert


Latham, Michael
Rhys Williams, Sir Brandon


Lawrence, Ivan
Ridley, Hon Nicholas


Lawson, Rt Hon Nigel
Ridsdale, Julian


Lee, John
Rifkind, Malcolm


Lennox-Boyd, Hon Mark
Rippon, Rt Hon Geoffrey


Lester Jim (Beeston)
Roberts, M. (Cardiff NW)


Lewis, Kenneth (Rutland)
Roberts, Wyn (Conway)


Lloyd, Ian (Havant &amp; W'loo)
Rossi, Hugh


Lloyd, Peter (Fareham)
Rost, Peter


Loveridge, John
Royle, Sir Anthony


Luce, Richard
Sainsbury, Hon Timothy


Lyell, Nicholas
St. John-Stevas, Rt Hon M.


McCrindle, Robert
Scott, Nicholas


Macfarlane, Neil
Shaw, Giles (Pudsey)


MacGregor, John
Shaw, Michael (Scarborough)


MacKay, John (Argyll)
Shelton, William (Streatham)


Macmillan, Rt Hon M.
Shepherd, Colin (Hereford)


McNair-Wilson, M. (N'bury)
Shepherd, Richard


McNair-Wilson, P. (New F'st)
Shersby, Michael


McQuarrie, Albert
Silvester, Fred


Madel, David
Sims, Roger


Major, John
Skeet, T. H. H.


Marland, Paul
Smith, Dudley


Marlow, Tony
Speed, Keith


Marshall Michael (Arundel)
Speller, Tony


Marten, Neil (Banbury)
Spence, John


Mates, Michael
Spicer, Jim (West Dorset)


Mather, Carol
Spicer. Michael (S Worcs)


Maude, Rt Hon Sir Angus
Sproat, lain


Mawby, Ray
Squire, Robin


Mawhinney, Dr Brian
Stainton, Keith


Maxwell-Hyslop, Robin
Stanbrook, Ivor


Mayhew, Patrick
Stanley, John


Mellor, David
Steen, Anthony


Meyer, Sir Anthony
Stevens, Martin


Miller, Hill (B'grove)
Stewart, Ian (Hitchin)


Mills, lain (Meriden)
Stewart, A.(E Renfrewshire)


Mills, Peter (West Devon)
Stokes, John


Miscampbell, Norman
Stradling Thomas, J.


Mitchell, David (Basingstoke)
Tapsell, Peter


Moate, Roger
Taylor, Robert (Croydon NW)


Montgomery, Fergus
Taylor, Teddy (S'end E)


Moore, John
Tebbit, Norman


Morris, M. (N'hampton S)
Turn pie-Morris, Peter


Morrison, Mon C. (Devizes)
Thatcher, Rt Hon Mrs M.





Thomas, Rt Hon Peter
Warren, Kenneth


Thompson, Donald
Watson, John


Thorne, Neil (Ilford South)
Wells, John (Maidstone)


Thornton, Malcolm
Wells, Bowen


Townend, John (Bridlington)
Wheeler, John


Townsend, Cyril D, (B'heath)
Whitelaw, Rt Hon William


Trippier, David
Whitney, Raymond


Trotter, Neville
Wickenden, Keith


van Straubenzee, W. R.
Wiggin, Jerry


Vaughan, Dr Gerard
Wilkinson, John


Viggers, Peter
Williams, D. (Montgomery)


Waddington, David
Winterton, Nicholas


Wakeham, John
Wolfson, Mark


Waldegrave, Hon William
Young, Sir George (Acton)


Walker, B. (Perth )
Younger, Rt Hon George


Walker-Smith, Rt Hon Sir D.



Wall, Patrick
Tellers for the Ayes:


Waller, Gary
Mr. Spencer Le Marchant and


Walters, Dennis
Mr. Anthony Berry.


Ward, John





NOES


Abse, Leo
Dewar, Donald


Adams, Allen
Dixon, Donald


Allaun, Frank
Dobson, Frank


Alton, David
Dormand, Jack


Anderson, Donald
Douglas, Dick


Archer, Rt Hon Peter
Dubs, Alfred


Armstrong, Rt Hon Ernest
Duffy, A. E. P.


Ashley, Rt Hon Jack
Dunn, James A.


Ashton, Joe
Dunnett, Jack


Atkinson, N.(H'gey)
Dun woody, Hon Mrs G.


Bagier, Gordon A.T.
Eadie, Alex


Barnett, Guy (Greenwich)
Eastham, Ken


Barnett, Rt Hon Joel (H'wd)
Edwards, R. (W'hampt'n S E)


Benn, Rt Hon A. Wedgwood
Ellis, R. (NE D'bysh're)


Bennett, Andrew (St'kp't N)
Ellis, Ton (Wrexham)


Bidwell, Sydney
English, Michael


Booth, Rt Hon Albert
Ennals, Rt Hon David


Boothroyd, Miss Betty
Evans, loan (Aberdare)


Bottomley, Rt Hon A.(M'b'ro)
Ewing, Harry


Bradley, Tom
Faulds, Andrew


Bray, Dr Jeremy
Field, Frank


Brown, Hugh D. (Provan)
Fitch, Alan


Brown, R. C. (N'castle W)
Flannery, Martin


Brown, Ron (E'burgh, Leith)
Fletcher, Raymond (Ilkeston)


Brown, Ronald W. (H'ckn'y S)
Fletcher, Ted (Darlington)


Buchan, Norman
Foot, Rt Hon Michael


Callaghan, Jim (Midd't'n &amp; P)
Ford, Ben


Campbell, Ian
Forrester, John


Campbell-Savours, Dale
Foster, Derek


Canavan, Dennis
Foulkes, George


Cant, R. B.
Fraser, J. (Lamb'th, N'w'd)


Carmichael, Neil
Freeson, Rt Hon Reginald


Carter-Jones, Lewis
Freud, Clement


Cartwright, John
Garrett, John (Norwich S)


Clark, Dr David (S Shields)
Garrett, W. E. (Wallsend)


Cocks, Rt Hon M. (B'stol S)
George, Bruce


Cohen, Stanley
Ginsburg, David


Coleman, Donald
Golding, John


Concannon, Rt Hon J. D.
Gourlay, Harry


Conlan, Bernard
Graham, Ted


Cook, Robin F.
Grant, George (Morpeth)


Cowans, Harry
Grant, John (Islington C)


Cox, T. (W'dsw'th, Toot'g)
Grimond Rt Hon J.


Craigen, J. M.
Hamilton, James (Bothwell)


Crowther, J. S.
Hamilton, W. W. (C'tral Fife)


Cryer, Bob
Hardy, Peter


Cunliffe, Lawrence
Harrison, Rt Hon Walter


Cunningham, G. (Islington S)
Hart, Rt Hon Dame Judith


Cunningham, Dr J. (W'h'n)
Hattersley, Rt Hon Roy


Dalyell, Tarn
Haynes, Frank


Davidson, Arthur
Heffer, Eric S.


Davies, Rt Hon Denzil (L'lli)
Hogg, N. (E Dunb't'nshire)


Davies, Ifor (Gower)
Holland, S. (L'b'th, Vauxh'll)


Davis, Clinton (Hackney C)
Home Robertson, John


Davis, T. (B'ham, Stechf'd)
Homewood, William


Deakins, Eric
Hooley, Frank


Dean, Joseph (Leeds West)
Horam, John


Dempsey, James
Howell, Rt Hon D.






Howells, Geraint
Mellish, Rt Hon Robert


Huckfield, Les
Mikardo, Ian


Hudson Davies, Gwilym E.
Millan, Rt Hon Bruce


Hughes, Mark (Durham)
Miller, Dr M. S. (E Kilbride)


Hughes, Robert (Aberdeen N)
Mitchell, R. C. (Soton Itchen)


Hughes, Roy (Newport)
Morris, Rt Hon A. (W'shawe)


Janner, Hon Greville
Morris, Rt Hon C. (O'shaw)


Jay, Rt Hon Douglas
Morris, Rt Hon J. (Aberavon)


Johnson, James (Hull West)
Moyle, Rt Hon Roland


Johnson, Walter (Derby S)
Mulley, Rt Hon Frederick


Jones, Rt Hon Alec (Rh'dda)
Newens, Stanley


Jones, Barry (East Flint)
Oakes, Rt Hon Gordon


Jones, Dan (Burnley)
Ogden, Eric


Kerr, Russell
O'Halloran, Michael


Kilroy-Silk, Robert
O'Neill, Martin


Kinnock, Neil
Orme, Rt Hon Stanley


Lambie, David
Palmer, Arthur


Lamborn, Harry
Park, George


Leadbitter, Ted
Parker, John


Leighton, Ronald
Parry, Robert


Lestor, Miss Joan
Pavitt, Laurie


Lewis, Arthur (N'ham NW)
Pendry, Tom


Lewis, Ron (Carlisle)
Penhaligon, David


Litherland, Robert
Powell, Raymond (Ogmore)


Lofthouse, Geoffrey
Prescott, John


Lyon, Alexander (York)
Price, C. (Lewisham W)


Lyons, Edward (Bradf'd W)
Race, Reg


Mabon, Rt Hon Dr J. Dickson
Radice, Giles


McCartney, Hugh
Rees, Rt Hon M (Leeds S)


McDonald, Dr Oonagh
Richardson, Jo


McGuire, Michael (Ince)
Roberts, Albert (Normanton)


McKay, Allen (Penistone)
Roberts, Allan (Bootle)


McKelvey. William
Roberts, Ernest (Hackney N)


MacKenzie, Rt Hon Gregor
Roberts, Gwilym (Cannock)


Maclennan, Robert
Robertson, George


McNally, Thomas
Robinson, G. (Coventry NW)


McTaggart, Robert
Rodgers, Rt Hon William


McWilliam, John
Rooker, J. W.


Marks, Kenneth
Roper, John


Marshall, Dr Edmund (Goole)
Ross, Ernest (Dundee West)


Marshall, Jim (Leicester S)
Ross, Stephen lisle of Wight)


Martin, M(G'gow S'burn)
Rowlands, Ted


Mason, Rt Hon Roy
Sandelson, Neville


Maxton, John
Sever, John


Maynard, Miss Joan
Sheerman, Barry


Meacher, Michael
Sheldon, Rt Hon R.





Short, Mrs Renée
Wainwright, E.(Dearne V)


Silkin, Rt Hon J. (Deptford)
Wainwright, R.(Colne V)


Silkin, Rt Hon S. C. (Dulwich)
Walker, Rt Hon H.(D'caster)


Silverman, Julius
Watkins, David


Smith, Rt Hon J. (N Lanark)
Weetch, Ken


Snape, Peter
Welsh, Michael


Soley, Clive
White, Frank R.


Spearing, Nigel
White, J. (G'gow Pollok)


Spriggs, Leslie
Whitehead, Phillip


Stallard, A. W.
Whitlock, William


Steel, Rt Hon David
Wigley, Dafydd


Stewart, Rt Hon D. (W Isles)
Willey, Rt Hon Frederick


Stoddart, David
Williams, Rt Hon A.(S'sea W)


Stott, Roger
Williams, Sir T.(W'ton)


Strang, Gavin
Wilson, Gordon (Dundee E)


Straw, Jack
Wilson, Rt Hon Sir H.(H'ton)


Summerskill, Hon Dr Shirley
Wilson, William (C'try SE)


Taylor, Mrs Ann (Bolton W)
Win nick, David


Thomas, Dafydd (Merioneth)
Woodall, Alec


Thomas, Jeffrey (Abertillery)
Woolmer, Kenneth


Thomas, Mike (Newcastle E)
Wrigglesworth, Ian


Thomas, Dr R.(Carmarthen)
Young, David (Bolton E)


Thorne, Stan (Preston South)



Tilley, John
Tellers for the Noes:


Tinn, James
Mr. Austin Mitchell and


Torney, Tom
Mr. George Morton.


Varley, Rt Hon Eric G.

Question accordingly agreed to.

Orders of the Day — WAYS AND MEANS

Social Security (Contributions)

Resolved,

That, for the purpose of any Act of the present Session to make provision in connection with certain contributions payable under the Social Security Act 1975, it is expedient to authorise any increase attributable to the said Act of the present Session in the sums which—

(a) under the Act of 1975, are to be taken as paid towards the cost of the National Health Service in Great Britain; or
(b) are payable under the National Insurance Surcharge Act 1976 by way of surcharge on secondary Class 1 contributions.—[Mr. Patrick Jenkin.]

European Community (Whale Products)

The Under-Secretary of State for the Environment (Mr. Marcus Fox): I beg to move,
That this House takes note of European Community Document Vo. 6873/80 the Department of the Environment's Explanantory memorandum of 4 June 1980 and the Supplementary Memorandum of 2 December l980 concerned with common rules for import of whale products; and welcomes the Govenrment's initiative for this Regulation which both significantly increases protection for whales and takes due account of the needs of affected interests.
It gives me great pleasure to introduce this debate on a topic which is of concern to many individuals, conservation bodies and, not least, this House. That interest was demonstrated by the 347 Members who associated themselves with early-day motion 17 during the Previous Session.
Whilst we have not been able to meet the request for a total ban on imports of all whale products, which we found on examination to present formidable enforcement problems, we are on the brink of achieving a ban on the great majority of them, not only here in the United Kingdom but throughout the European Community. We continue to support the concept of a moratorium on all commercial whaling—the other issue raised by that early-day motion.
The Community clearly possesses the political will to adopt the regulation to which this motion refers. That is particularly gratifying, as the proposal for this regulation was one of the Government's first policy initiatives in Europe on taking office.
I believe that the Community will shortly adopt a truly altruistic measure by banning the import of whale products for the sake of endangered whales, even though there will be some cost to our peoples.
The International Whaling Commission at its meeting in London in July 1979 agreed upon a ban on commercial whaling by factory ships, except for minke whales, and the establishment of whale sancturary in the Indian Ocean. The meeting only narrowly failed to pass a proposal to ban all commercial whaling, a move which the United Kingdom supported. It was in the wake of these measures that the United Kingdom government announced their intention of seeking within the European Community a ban on the importation of sperm whale products.
When, however, my right hon. Friend the Secretary of State wrote, to the President of the Commission of the European Communities in October 1979, the request was for a ban on the primary products of all whales. The conservation case for such a ban is stronger than that for sperm whale products only. Whereas the United Kingdom lad banned imports of products from other whales—known as baleen whales—since 1973, much of the whale oil being imported into the Community was of baleen origin. I a am glad that the right hon. Member for Dudley, East (Dr. Gilbert) understands this matter and agrees with me, because this is of supreme importance. Some species of baleen whale are far more seriously endangered than is the sperm whale, and so it is right that the whole Community should give them protection, too.
The list of products we proposed for banning was deliberately: restricted to primary products since we considered this most likely to lead to a quick agreement.

We also suggested that the ban became operative with effect from 1 January 1982 since consultations with industry had demonstrated that, although there were no insurmountable difficulties, a reasonable interval was required in order to develop production techniques not requiring whale oil. In the United kingdom, the major consumers of this oil, the leather and lubricants industries, indicated that they should be able to switch to alternatives by 1 January 1982.
In April 1980 the European Commission published a proposal for a Council regulation to impose a ban under article 113 of the Treaty of Rome. The proposal accorded with the United Kingdom's suggestion, but leather treated with whale oil had been added to the list of products we had proposed. Although this extension will make only a small contribution to the protection of the sperm whale, it was welcomed by the British leather industry, which rightly feared that its hard-pressed industry could experience unfair competition front non-Community countries.
At the meeting of the Council of Environment Ministers on 30 June, my right hon. Friend the Minister for Local Government and Environmental Services was able to secure agreement in principle to the proposal for a regulation, subject to the opinion of the European Parliament. Here I add a vote of thanks to my right hon. Friend for pursuing this initiative with such success. The technical and legal details were remitted to permanent representatives with a view to rapid final adoption.
In subsequent discussions the United Kingdom has maintained the pressure for progress, and, as hon. Members will see in the annex to the supplementary memorandum, there is agreement on the operative date of 1 January 1982. There was, however, prolonged debate on the legal basis of the ban, the implementation of the regulation, whether member States could go beyond the regulation and, not least, the list of products to be covered by the ban. Happily, on almost all these points there is now Community agreement.
The one remaining major issue is the legal barriers of the regulations. The Commission argued that, as the ban was on trade, article 113 of the Treaty of Rome applied. The Council, however, maintained that since the reason for having the ban was to conserve whales and other cetaceans, article 235 should apply.
The majority of States, including the United Kingdom, supported article 113, but two held out for article 235. A compromise of basing the regulation on both articles has been considered but has not yet been accepted. It 'is, in effect, this impasse which is preventing adoption of the regulations, and I am hoping we can break the deadlock at the meeting of the Council of Ministers on Friday 12 December, which I shall be attending. It is quite clear that the Treaty was drafted to allow the Community to act in this way, and I are sure that we can find a solution.

Mr. Tam Dalyell: Can the Minister say a little more about the reasons behind this impasse? Some of us are less than clear about who is creating the impasse, and why.

Mr. Fox: We have a one and a half hour debate ahead of us.
In these meetings of the Council of Ministers, there is a degree of—dare I say—bartering or wheeling and dealing. There are always nations which have a vested


interest in not acceding initially to what seems to be obvious. Only two member States are holding out against agreement. I am quite certain, because of the enormous interest in this, that this initial measure proposed by the United Kingdom will find agreement. But, if the hon. Member for West Lothian (Mr. Dalyell) wishes to make a further contribution, I shall be happy to reply to him at the end of the debate.

Mr. Dalyell: I asked a simple, direct information question. It would be more useful to have it answered at the beginning of the debate than at the end of it. It is a very simple question.

Mr. Fox: Perhaps I have not been as forthcoming as I should have been, Denmark and Germany are the countries involved.
The draft regulation originally published provides for proposals on implementation to come from the Commission. The regulation as now amended establishes a committee which will be able to propose further products for control as well as work out the way in which the regulation is to be implemented.
Some member States, including the United Kingdom, already have controls which go further in certain ways than those agreed by the Community, and others may wish to go further. There is now agreement that member States should have this latitude, which has been included as an addition to article 3 to the regulation in the form given in the annex to our supplementary memorandum as article X.
One of the major talking points both within the Community and here in the United Kingdom has been the list of products to be controlled by the regulation. As I said earlier, the objective is conservation of whales, and we therefore framed our original proposal to bring the bulk trade in whale products under control as quickly as possible.

Mr. Michael English: I think that the Minister has touched upon what will resolve all our doubts. He will be aware that we have all been told up till now that there could not be a United Kingdom regulation to prevent the import of whale products because there was to be a European Community one. That is fine, if that is the case. Now, there is not a European Community one. There is only a regulation which says that there is to be a committee. But the Minister says that we can prohibit imports unilaterally. Does that mean that the United Kingdom Government will?

Mr. Fox: The hon. Gentleman uses the word "unilaterally". I think that that would be a measure of failure. It would be far better for us to achieve Community agreement on this very important matter. But the position is rather better than the hon. Gentleman suggests. If any member State wants to go further than what this proposed directive contains, it can do so.

Mr. English: And we will.

Mr. Fox: I do not think that there will be any need for us to do anything other than get agreement, if we do, on Friday. I think that that will provide all that we need.
In negotiations, however, we have been able to extend the controls to cover leathers and fur skins treated with whale oil and a wide range of products made from them without causing delay to adoption. That should minimize

the risk to the British leather and leather manufacturing industries from competition outside the Community that still uses whale products.

Dr. John Gilbert: The Minister said in reply to a previous intervention that it was possible for any Government, including this Government, to go further if they wished to do so. I do not dissent from his proposition that it is better to achieve unanimity in the Community. But is he saying that the Government, over and above a Community agreement, could go further but have no intention of doing so? Is that the Government's position?

Mr. Fox: No. The Government have no intention of going further than what is proposed. In the negotiations, certain other member States introduced specific issues where they sought firmer controls. It has been made clear to them that if they wish to do that they are entitled to do so.
Provision is contained in the regulation for additions to be made to the list of products in case significant avoidance of the controls is detected. Furthermore, it is proposed to subsume the regulation into the one on the implementation throughout the Community of the Washington convention. The new draft regulation has yet to be discussed within the Community and in the House. When it is, there will be a further opportunity to consider whether additional products should be covered
There is, however, a very wide range of goods, mainly pharmaceutical, among which a very small proportion of products contain small quantities of whale by-products which are not to be controlled. The Community did not consider that the conservation benefit from extending the controls over that extensive range justified the extra cost and difficulty of enforcement. An extension of the controls could well dilute the available effort and bring them into disrepute with enforcement officers and traders alike.
The European Parliament has warmly welcomed the proposal to limit imports of whale products. It gave the opinion that the ban should come into force on 1 July 1981 and be extended to cover all products that can be shown to derive from cetaceans or to contain products derived from cetaceans. Those suggestions are, however, impracticable and not, we believe, relevant to the conservation of these creatures.
The date 1 January 1982 has proved acceptable to all member States, but many of them started the switch to substitutes later than the United Kingdom and need the extra time to complete the changeover. A total ban, which some hon. Members have suggested, would, as I have indicated, extend the volume of goods by one hundredfold, only 1 per cent. of which would contain whale products subject to control. Such an extension to cover the minute percentage of products not covered by the regulation as framed would be disproportionate and counter-productive, almost certainly resulting in a weakening of the controls as a whole.

Mr. Eldon Griffiths: I wish to ask a simple question of principle. Bearing in mind that my hon. Friend is attending a meeting on Friday to try to break the deadlock, may I ask whether he is confident that the list that will be enforced will effectively remove the incentive for people to kill whales at sea?

Mr. Fox: I wish that I could give my hon. Friend the assurance that tie seeks. To cut off the source of demand is the only option open to us. We are working towards a ban in terms of catching whales.

Mr. Griffiths: I am asking my hon. Friend for his opinion as a responsible Minister. Does he believe that, taking into account some of the difficulties, we shall remove the incentive for the killers of whales to go to sea?

Mr. Fox: My hon. Friend used the word "deadlock". There is no deadlock, and my answer to my hon. Friend is "Yes".

Mr. Dalyell: That is an important answer.

Mr. Peter Hardy: The House needs to be clear about the matter that the Minister is dealing with. He tells us in one breath that it is not a ban but a limitation and in the next breath he says that eventually there will be no more whaling. [HON. MEMBERS: "No "] If the hon. Gentleman is not saying that there will be no further whaling, he is not entitled to have replied as he did to the hon. Member for Bury St. Edmunds (Mr. Griffiths).

Mr. Fox: Originally, we sought a ban on whaling. We failed to achieve that, and the regulation seems to be the test way forward.

Mr. English: I am grateful to the hon. Gentleman, especially for allowing me to intervene twice. The Government told the House that we asked for a ban on whaling. There is no dispute about that. We accept the Government's honest intentions and that they failed to achieve them, but the Under-Secretary has also said that any individual State can go further than the proposed regulation. [Interruption.] I wish that the Minister far Local Government and Environmental Services would not intervene while I am talking to the Under-Secretary.
Will the Government do their moral and honest best to carry out what they told the House, by going slightly further than the regulation and introducing an import ban in Britain? We only want the Government to prove what v e believe, namely, that they meant what they said.

Mr. Fox: As this all came about as a result of an initiative from the British Government, it would be ridiculous to talk at this stage about going further.

Mr. English: Go as far as the Government said they would.

Mr. Fox: If we find that the proposal does not go far enough, we shall not hesitate to take the matter back and go further.
Having made a bid for Community action, it would be unfortunate for the United Kingdom to consider unilateral action. Imports of primary whale products into this country have already almost disappeared in anticipation of the EEC ban. On Friday I shall be attending a meeting of the Council of Environment Ministers, which will be considering the regulation for formal adoption. I am delighted that the House has shown that it wants me to take a strong line in persuading the Council to agree to adopt the regulation on the lines that I have suggested.
I ask the House to approve the motion so that I have hon. Members' support in our negotiations on a regulation which the United Kingdom initiated and which has achieved much better progress than we could originally hive hoped for.

Mr. Ted Graham: This is a short debate, and I am as pleased as the Minister to see that so many hon. Members are obviously anxious to take part. I shall try to be as brief as I can.
The prime purpose of the regulation is to restrict the international trade in whale products, and it must be welcomed in every part of the House. There is no doubt that it will be welcomed by thousands, if not millions, in this country who have campaigned for a long time. The regulation is good as far as it goes, but there is something more — I will not say a great deal more — to be achieved. Ministers have made statements that are to their credit, but they will be the first to admit that what we are being asked to approve is not 100 per cent. of what the Government want.
It would be churlish to begin the debate without paying tribute to the Secretary of State for Industry and the Minister for Local Government and Environmental Services, who have persisted in trying to get the aspirations of the House achieved. There has been a constant battle, as all who follow the matter know, between the interests of the whalers and those of the conservationists. That has led to the difficulty with the International Whaling Commission about the setting of quotas. The arbitrary way in which people have not accepted the quotas for various species has brought the method of banning Into disrepute.
The House must make it clear to our EEC partners and the world that the hunting and trading of whales must be ended before the species is made extinct and the ecological balance is permanently disturbed. That is the object. Tonight, we are arguing in a low key about whether the Government will achieve that laudable aim. It is a sobering thought that the effect on the marine environment of reductions in the whale population which have already occurred is as yet unknown. It is too early to say precisely what damage has been done by the over-fishing of whales.
I welcome the intention in the document that Britain and the EEC should speak as one voice. It is important that there should be a European voice. Only four EEC countries—Denmark, France, the Netherlands and the United Kingdom—are members of the IWC. Over the years and under both Governments, Britain has played a major role in trying to reach the present stage of progress. The Minister of State Department of the Environment said on 2 July that the Government were wholly committed to the conservation of endangered and vulnerable species and intended to keep up the pressure on this front.
What initiatives do the Government have to keep up the pressure? We can analyse the shortfall, but we must know how the Government intend to impose pressure. It is sad that at the July meeting of the IWC the call for a moratorium made by this Government, to their credit, was resisted principally because of the attitude of Japan and the Soviet Union, which currently catch two-thirds of the whales caught. Have the Government abandoned the idea of raising the moratorium issue at a suitable level?
Without reference to anyone else, the United States has begun to implement a ban. Australia has decided to take unilateral action from January 1981 rather than January 1982. There is nothing to stop any country which is party to the agreement from taking its own initiative.
Substitutes are central to the issue. The resistance to the ban is based on two arguments. The first is that whale products are necessary. The second is that substitutes are difficult to provide and costly.
The Under-Secretary of State for Industry told the House:
My Department has for some time taken a close interest in the industrial usage of sperm whale oil and is now satisfied that substitutes are or can be made available for all present uses of sperm whale oil."—[Official Report, 22 October 1979; Vol. 972, c.16.]
I appreciate the important cash nexus in the arguments. No country can say that it is unable to ban because the cost would be prohibitive or because the substitutes are not available.
The trade union movement, through the resolutions of the economic committee which were subsequently endorsed by the TUC general council, has fully supported the initiatives which have been taken, which have been seen to have been given impetus by the Government, over the past year. The TUC recognises that, although jobs might be lost, an equal number, or even more, might be found as a result of substitution.
Earlier today I spoke to the Friends of the Earth. It recognises that much has been achieved but states that more still needs to be done, not least in finding a satisfactory alternative to ambergris. It has asked me to say that it is pleased with the success that has been achieved so far and that it will continue to put pressure on the Government. It hopes that the Government will continue to exert pressure in the relevant quarters to achieve the complete ban that we want.
It appears to the Opposition that a major factor in eventually banning the hunting of the whale has been to add to the list of primary products a substantial list of secondary products. Some of the secondary products have been mentioned. It seems that an enormous task will be placed on the Government and their inspectors and control methods. Additional products include articles of leather such as travel goods, handbags, skins, footwear and gaiters. We are talking about 3 million handbags, 1½ million pairs of gloves and 56 million pairs of shoes, wholly or in part.
Even though every member of the EEC will be a party to the agreement, we shall not know whether all the goods that come into Britain from the EEC will have been made in a member State. I hope that the Minister will explain in much more detail, either in his reply or in writing, the steps he will endeavour to take to ensure that the agreement and regulations are kept. The Government will want to ensure that they are kept, but determined groups will be seeking loopholes or ways round the regulations.

Mr. David Mellor: The hon. Gentleman has made a valuable point in talking about the difficulty of checking products. Does he agree that that answers the argument of some of his hon. Friends who suggest that the Government should act unilaterally or go for a complete ban? Great as are the difficulties in checking secondary products, 95 per cent. are presently controlled. To bring the additional 5 per cent. within control would multiply by a far greater percentage the number of checks that would have to be made. It would be difficult, if not impossible, to enforce a complete ban.

Mr. Graham: I acknowledge that 100 per cent. policing and regulating of such measures will bring difficulties. I was interested to hear the Minister talk of additional manpower aspects involved in meeting the 95 per cent. control. The Government are reducing manpower wherever and whenever they can. I recognise some difficulties in meeting the additional manpower requirements.
I hope that the Minister will refer to the major alternative that is being considered, namely, the jojoba plant. In the USA, Mexico and Israel—it may apply to other countries—there have been major advances in research in determining whether that plant will produce an alternative. Are we encouraging or monitoring the research?
Although it is an offence under existing regulations to sell or display animals, plants or parts thereof that have been illegally imported, I am told that there have been only three prosecutions to date. That intrigues me. Have we detected and prosecuted only three cases, or has only very little effort been made to get round the regulations?
The ban essentially covers primary products, even though it includes leather, skin and skin treated with whale oil. Can the Minister tell us—not necessarily tonight—what the plans are for ambergris and whale hide? Having taken advice, I believe that they are major omissions from the lists. Why do they not include secondary whale products, such as cosmetics, lubricants and the derivatives needed for cosmetics and lubricants produced with whale oils, particularly those imported into the EEC? Do the Government intend to keep up the pressure to extend the list in the annex?
I do not accuse the Government of being complacent or smug. They are entitled to feel satisfied with the progress achieved, but I hope that they will continue to keep up the pressure. Will they state unequivocally that they will not consider their task complete until the use of whale products, directly and indirectly, ceases? We want a reaffirmation of the ambition of this Government and the previous Government to stop whale hunting, which endangers the species. Is it not possible, even at this stage, to press for a date earlier than 1 January 1982? We know of the action of the United States and Australia. Hon. Members may argue that industry has to retool and readjust. However, whales may be killed needlessly in the next six, four, three or two months.
We shall not oppose the regulation. In fact, we want to say kind things about the Government's initiative in this matter.

Mr. Peter Griffiths: I wish briefly to give a warm welcome to the draft regulation and congratulate the Government on their initiative in this matter.
In the early summer, my constituency was host to a conference of all the national organisations concerned with seeking the protection of whales. At that time most hopes were pinned strongly on the coming meeting of the International Whaling Commission. It was hoped that a complete moratorium on whale hunting could be achieved. However, it is important to make clear that, although the divisions and delays that have always bedevilled the IWC were seen, the regulation, even if it finally receives the agreement of our EEC partners and becomes effective, will not be an alternative to continuing the attempt to


obtain an ending to the hunting of whales through the IWC. I do not see the regulation as an alternative to that but as an additional way of protecting the whale stocks.
The civilised conscience demands an end to hunting, Put there is strong evidence that the only way in which the slaughter of these sensitive and sentient creatures will be ended is by commercial pressure on those who utilise the Products. In the past, that has proved to be particularly effective. The substitutes that are now so widely used—eosmetics were mentioned earlier—have been used over he last few years because of pressure from customers. It has become more profitable to move away from the use of whale products, which has been the most effective way of Fringing about change and the development of alternatives.
The regulation goes a long way towards creating the conditions in which whale hunting would become less profitable. It is important that we should recognise Mat here is an advantage in a united movement and a united regulation rather than a series of different national regulations. I make no secret of the fact that I should like a total ban on whale hunting and on the importation of whale products into this country. Nevertheless, I recognise that making regulations and policing them is different. It is not simply that the International Whaling Commission has not teen at le to agree on what should happen to the whale population but rather that where it has agreed it has not always led to the acceptance of those restrictions by Governments and individuals who have known of the restrictions.
I congratulate the Government on their original initiative and on maintaining the momentum, and I hope that my hon. Friend the Minister will be successful in his negotiations on Friday. This is an occasion when, whatever minor doubts we may have about the completeness of the regulation, we should not do other than welcome with acclamation this step forward by this country and by our partners

Mr. Peter Hardy: Had I originally intended to speak in this debate, I would simply have suggested that the regulation could have been brought forward earlier.
The Minister may be aware that about 18 months ago a number of hon. Members, including the hon. Members for Bury St., Edmunds (Mr. Griffiths), Watford (Mr. Garel-Jones) and Isle of Wight (Mr. Ross), and my right hon. Friend the Member for Dudley, East (Dr. Gilbert) and I took part in a pleasant and successful rally in Trafalgar square. In response to that extremely well-supported rally, the Government gave a clear commitment. In so far as these proposals meet that commitment, they are to be welcomed. I would have been prepared to welcome them grudgingly in respect of the 18 months delay but to welcome them nevertheless. Unfortunately, the Minister's speech causes concern and suspicion.
I am suspicious about two or three items in the proposals. For example, I am worried about the date of 1 January 1982. I wonder whether it will give the unscrupulous manufacturer here or some of our competitors in Europe an opportunity to stock up in advance. We need some reassurance about that.
I was also worried when the Minister we have known each other for some time—started talking about Wheeling and dealing. Hon Members, particularly

Yorkshire Members on this side of the House, may be a trifle suspicious, as I am, about paragraph 5 of the explanatory memorandum, which states:
Some Member States already have controls which go further than those agreed, and others may wish to go further.
I formed the impression that the Minister did not want us to go any further. The next sentence reads:
There is agreement that Member States should have this discretion.
As we have the discretion, and in view of the commitments from all parties, we are entitled to expect the Government to use it.
The proposal for an additional article is before member States now. We ask the Minister for an assurance that on Friday the United Kingdom will emphatically support the provisions of that article. We ask also that he and his advisers will do their utmost to ensure that the article is as meaningful as possible and fully in accordance with the commitments that the Government made 18 months ago, in response to the Trafalgar Square rally.
I apologise to the Minister if my impression is wrong. He needs to make the position absolutely clear before the debate is over, because he seemed to give the impression that he and the Government did not wish to go one jot beyond that which is already provided for. In my view, that is a breach the commitment made on behalf of the Government in response to the hundreds of thousands of people who supported the campaign.
My hon. Friend the Member for Edmonton (Mr. Graham) referred to the congratulations that had been offered to the Government. If the Minister satisfies us on the points that we raise, those congratulations will be entirely deserved. If he is not prepared to do that, the Government will be seen to have betrayed their friends and to some extent broken their word.
They will cause considerable irritation, which is absolutely avoidable, because I believe that in this connection the Government want to be on the side of the angels. I believe that they do not want to put their supporters, such as the hon. Members for Watford and Bury St. Edmunds, in an embarrassing position.
As we have for some years adopted a view that has across-the-board support in the House, it would be very unfortunate if the Government did not make the position clear and demonstrate that they are in no way in breach of the pledges and commitments that they made 18 months ago. We look forward to hearing from the Minister.

Mr. Fox: I realise that other hon. Members may take the same line, so perhaps I may intervene now. The hon. Gentleman talks of our dragging our feet. As we got 95 per cent. of what was asked for 18 months ago, I should have thought that by any measure—in terms of securing agreement not simply by the United Kingdom but by the European Community—this proposal must be a success, bearing in mind the reluctance of certain of our partners initially. If the hon. Gentleman gives me an example of where he thinks we have failed, I am sure that I shall be able to reassure him.

Mr. Hardy: I am delighted to hear that, but the fact remains that the Minister gave the impression in his speech that he was very reluctant to see Britain going beyond the article. If he will clarify that, I shall be glad.
As our position in Western Europe on this matter was commendably in the lead, it would be highly regrettable if we allowed other member States to go beyond the article


while we refused to do so. We are not asking the Minister to go very far; we are asking him to ensure that the United Kingdom stays in the lead. If we appear to be falling behind other countries that have followed our example, we shall not appear in a good light internationally.
If the Minister can satisfy us on that matter, the Government will be entitled to congratulations. It would be foolish of the hon. Gentleman to throw away that opportunity. The Government are not very popular in the country. It is pleasing that there is at least one area where they can easily command popularity. I am tempted to say that I wish they showed as much consideration for my constituents as they do for whales, but that would be grudging. I hope that at least the Minister will not throw away the slight advantage that it was possible for the Government to gain in recent months.

Mr. Tristan Garel-Jones: When I was elected to the House, one of my first acts was to table an early-day motion on this matter, which eventually collected 347 signatures of hon. Members from both sides of the House. I am particularly grateful to my hon. Friends the Members for Bath (Mr. Patten), Bristol, West (Mr. Waldegrave) and Preston, North (Mr. Atkins) and to the hon. Members for Blackburn (Mr. Straw) and Birkenhead (Mr. Field), who were the original main sponsors of the motion.
It was only later that I discovered that early-day motions have become something of a device and have rather lost the initial meaning and force that they were intended to have. But I am delighted to say that that early-day motion 17, in gathering no fewer than 347 signatures—a record for the past decade—did no more and no less than reflect the level of feeling that there is throughout the country on this very important matter.
It is worth saying — Opposition Members have generously acknowledged it—that the draft regulation is the outcome of an initiative by Her Majesty's Government. I support the remarks made by the hon. Member for Edmonton (Mr. Graham) in saying that I hope that, if there is any possible way of achieving an advance on the date which has been fixed for switching to substitutes—1 January 1982—the Government will press for that.
The hon. Member also mentioned ambergris as used in perfumes. I am a little surprised and disappointed that that substance has come outside the annex. I hope that this is another area where the Government will continue to press for what is required.
Labour Members asked my hon. Friend the Under-Secretary of State for the Environment whether he could guarantee that the regulation would bring an end to commercial whaling. He cannot, of course, give that guarantee, but I hope that he is aware that the feeling in the House is that if commercial whaling continues and we see any further measures that can be taken, our country will go on taking a lead, not only in the European Community but in any other forum. I mention particularly the International Whaling Commission, because in the next year we shall aleady have achieved a sanctuary for whales in the Indian Ocean and would like to see the

Government pressing for another sanctuary in the Atlantic Ocean. Although this country is no longer, fortunately, a whaling country, it can help to—

Mr. Dalyell: We should not be under the delusion that we have any sanctuary in the Indian Ocean, because of the activities of the pirate whalers, about which the Government of the Seychelles rightly complain.

Mr. Garel-Jones: That is a very important point, and it underlines the fact that, while on each side of the House we are congratulating the Government, we cannot yet claim that we have saved the whale. We have taken measures which will perhaps help to save the whale, but we must ask the Government not only to be ever vigilant where these measures are concerned but to seek to extend them, not only in the European Community but in other world fora such as the IWC.

Dr. John Gilbert: As I shall in a moment be saying a few things rather critical of Ministers, perhaps I may first indicate that I make my remarks in no partisan spirit by saying that the record of this Government is considerably better than that of the Labour Government in this field. I pay tribute, therefore, to what Ministers have succeeded in doing so far, and I pay them that compliment without reserve. I am delighted that they have gone as far as they have.
Having said that, I must say that I found some of the Minister's remarks this evening unacceptable. I understood him to say to me, quite ambiguously, in reply to an intervention earlier in the debate, that the Government had no intention whatever of going beyond this regulation at any future time. If the Minister wishes to change that interpretation, I shall be delighted to hear from him when he replies, if he catches your eye again, Mr. Deputy Speaker, later in the debate.
I do not think that it is good enough to take a position that all that the House should be interested in is saving whales that have become endangered species. I am 100 per cent. absolutist in this matter. I see no excuse for killing any whale on any occasion, for several reasons. I consider it to be a barbaric practice. There is no way of killing these creatures painlessly. It is not necessary to kill them for any economic reason whatever. I shall revert to that point in a moment. It is merely because it has been a traditional industry in some parts of the world that this practice has continued for so long. There is no need whatever for it. We should pay tribute to the efforts of Tory Members. We should be pressing, as Members on both sides of the House have already done, for an end to all whaling at all times, in all places.
As the hon. Member for Portsmouth, North (Mr. Griffiths) said so well, these are sentient creatures who experience great pain, and they probably have an intelligence no less than our own.
I said that there was no economic reason for the use of whale products. The Minister referred to their use in the leather goods industry and as lubricants. I draw his attention to the record of the last Government in this respect, because work was undertaken at the Ministry of Defence when I was there—if I may blow my own trumpet for a moment—which resulted in all the major oil companies producing substitutes for all lubricants used


by the Ministry They said that there was no need whatever to use sperm whale oil in any lubricants used in this country. There is no excuse for it.
I turn to the leather goods industry. The Ministry of Defence was concerned about a range of leather goods, particularly high-quality leather goods in which sperm whale oil was used. The most high quality of these leather goods were pilots' flying gloves and the backs of the pelmets that jet pilots wear. As a result of a series of tests undertaken by the Ministry of Defence, it was found that these leathers could be produced to the highest quality—because pilots' fingers had to be extremely sensitive through these flying gloves—and could give the right degree of stretch, wear and sensitivity, without using sperm whale oil products and without any appreciable increment in cost.
These were tests done within the Government. The results were announced by this Government, because they were not completed when the Labour Government were in office. The results were announced by the present Minister of State, Ministry of Defence, Lord Strathcona, early last year. There is no excuse for the leather industry saying that t needs until 1 January 1982 to produce substitutes. The substitutes are known. They exist, and the Government should force the leather industry to come into line much quicker.

Mr. English: I can confirm that the Government to 'which ray right hon. Friend referred were most forthcoming in this respect. I am sure my right hon. Friend will recollect my writing to him and his colleagues about this matter after having consulted the chemical industry of he United Kingdom, which quite explicitly said that synthetic products could be produced to replace all the products now in argument.

Dr. Gilbert: As for the use of whale products in the one area in which the Ministry of Defence was not concerned, cosmetics, frankly I do not think it is worthy of any hon. Member to put forward the argument that we should go on killing whales because there are not enough versions of cosmetics available for women when they adorn themselves without using whale products as ingredients. That is an argument that will not wash.
I support what the hon. Member for Watford (Mr. Garel-Jones) ha; said about safe zones for whales and I hope that the Government will take the lead in international fora to get further zones of this sort established. Of course, there will be problems with pirates and inspections. What the Ministry of Defence did was to require everyone who had a contract with it to sign an undertaking that no sperm w hale oil was an ingredient in any product being sold by it to the Ministry. It is easy, without legislation, for the Government to go to the former users of these products and invite them to sign an undertaking of this sort. What we want to see is the Government going beyond what they have so far achieved and not resting on their laurels. They should not rest until they have made it absolutely impossible for there to be any economic incentive for anyone to import any whale product into this country.

Mr. David Mellor: There are many blots on cur civilisation. To my mind, not the least of them is the Continued hunting of the hale. I shall not detain the

House by commenting further on that, except to say that I agree with the right hon. Member for Dudley, East (Dr. Gilbert).
I wish that there had been agreement among all the worlds whaling nations no longer to pursue this cruel and unnecessary practice. However, that is not the case, and the situation that my hon. Friends in the Government have had to face was that the IWC had turned down this proposition.
I think that it is right to pay a generous tribute to my right hon. Friend the Member for Bridgwater (Mr King), the Minister for Local Government and Environmental Services, for all that he has done. It is easy for those who have played no part in the negotiations to say that he should have gone further—that becomes almost a cliche in this House — but I say that it is a formidable achievement to have led European opinion, because anyone who has taken an interest in animal welfare knows that many of our European neighbours lack the standards that we have in these matters. Those of us who have been pressing for amendments of the rules on animal experimentation know just how difficult it is to see any form of common European arrangements.
I repeat that I think that my right hon. Friend is to be congratulated, and my view—I hope that it is not a complacent one, because I have been concerned about what some Opposition Members have said—is that for this country, and for the Community if the regulation is ratified, the Government will have beaten the problem of making it commercially worth while to kill whales in order to have a Western European market for their products, because the import of primary products has gone, and 95 per cent. of secondary products are covered.
It is easy to say "Why not 100 per cent.?" and I share the view of my hon. Friend the Member for Watford (Mr. Garel-Jones) that in the long run that has to be our aim. Equally, however, there is a problem among politicians that we turn to our constituents and say 'We banned it" and people can say "How wonderful that you have done that". But all the problems of enforcement, of actually stopping people from doing what we do not want, rather than merely saying that it is unlawful to do so, are left on one side in the glib utterances that so many of us have made on so many issues.
I do not think that it would be right for any of us to underestimate the points that are set forth in these documents about the difficulties of actually checking and ensuring that the regulation is not defeated. Living in the real world, and knowing how sorely pressed are those who have control over checking for illegal importations and how much work they already have without this additional imposition, I think that it would be right for us to work with this new regulation if, as is hoped, it is adopted by the Community and then, in the light of experience, to move to bringing into control those 5 per cent. of secondary products which, in terms of the problems that they pose for enforcement, are far more substantial than the figure of 5 per cent. would indicate.
It is regrettable that not all members of the Community share our abhorrence of killing whales, and particularly the role of Denmark in this matter is to be deplored. I have said in the House before on the accession of Greece in relation to its standards on article 25 of the Convention on Human Rights and my constituent Ann Chapman that it is


regrettable if members are allowed into the Community, which is more than just a commercial union, if they do not obey common standards of civilised behaviour.
It will be unfortunate if Spain is permitted to enter the Community while there remains this substantial blot and question mark over her adherence to the quota. I take the view that there is a good deal of evidence to suggest that Spain is not playing the game here, and before that country is welcomed into the Community it is right that it should put its house in order in this respect.
We would have wished to see a moratorium on the killing of whales, but it would be wrong to regard this as only just second best, because the truth is that if one removes the commercial basis for killing one removes an incentive far greater than merely the incentive to break the law. Anyone who doubts the validity of that proposition should consider the difficulties of enforcing a ban on the killing of elephants in East Africa. Because ivory remains commercially a highly marketable product, certain people will go to any lengths to evade the prohibition on killing. If we are able to create conditions in which substitutes are available and the pressure of bans does not make it commercially worth while for people to consider buying whale products, even if they are available, I believe that we shall have done almost as much as by getting a moratorium on killing.
I turn now to the two nations which are currently preventing the IWC from taking action on a moratorium — Russia and Japan. To my mind, it is almost impossible that the argument of civilised behaviour alone will weigh with those in authority in Russia. But there is that whole concept of linkage devised by Secretary Kissinger as the basis of negotiations with the Russians. I sometimes feel that we give away too much in our trade and other negotiations with the Russians and get too little back. Given the Russians' desperation for our high technology and other forms of agreement, there is no reason why that should not be linked to agreement on certain matters, and the Russians' attitude to the killing of whales would seem not worth neglecting.
The Japanese have done a great deal — a much-needed great deal — to put their house in order as regards civilised standards, but one area in which they have singularly failed to do so concerns their view on animal welfare, which is deplorable. One has only to consider the slaughter of dolphins by Japanese fishermen to realise that their standards leave a great deal to be desired.
Again, I suspect that commercial pressures can be brought to bear on the Japanese. Surely we should not hesititate to point out candidly, as only friends can, to a nation that seems anxious to be accepted as a civilised nation in the West that it is not enough to have a fast-growing economy and great industrial base, that being a civilised and leading country is about other standards than that and that, while the Japanese maintain their attitude to whaling, they are not fit to be numbered among civilised nations.

Mr. Stephen Ross: The hon. Member for Putney (Mr. Mellor) has, as usual, made the points that I wished to make, but I do not mind.
I congratulate the Government on what they have done. I do not know whether my congratulations should go to the Secretary of State for Trade, the Minister of Agriculture, Fisheries and Food or the Secretary of State for the Environment. I suspect that this initiative started in the Department of Trade. Whether it be the Secretary of State for Trade or the Minister of Agriculture, Fisheries and Food, I give hearty thanks. However, I am disappointed that we have not gone to the full 100 per cent.
The hon. Member for Putney said that some member States do not have the same attitude as we have to animal welfare, but, as the hon. Member for Rother Valley (Mr. Hardy) said, some member States have controls which go even further. Perhaps we may be told which member States are intending to impose a total ban.
I remind the hon. Member for Watford (Mr. Garel-Jones) that during the six and a half years of my membership of the House every early-day motion on whale products has had a substantial number of signatures—certainly more than 300. I agree that his motion had the highest number. However, in each case there has been a call for a total ban on the import of whale products. A motion signed by 347 Members—more than half the membership of the House—should count to some extent in the Government's thinking on this issue, and it should be a total ban.
I was in Japan four years ago. At that time I asked the Foreign Secretary when whaling would be stopped, and the answer was silence. Some of my colleagues went to the fish market in Tokyo at about 5 o'clock one morning and saw some of the fish that had been brought in. They saw dolphins and goodness knows what. The Japanese fishermen just dredge the sea.
Recently, I took part in a demonstration outside the Japanese embassy on the killing of dolphins. I may say that when we went inside to meet one of the officials we got a receptive response. He seemed to understand that we in Western Europe at least felt strongly about what was happening in Japan.
I understand that the Japanese kill the largest numbers of whales. If they can be persuaded to stop this practice, I believe that the Russians will quickly follow suit, because their fleet is very much out of date. We have the whip hand in this matter because the Western world takes huge imports from Japan. Surely the Americans, who have a great storage of sperm whale oil and, therefore, have been able to impose a total ban, the Australians and ourselves in trading negotiations can say "The British people and most other people in the Western world feel very strongly about this matter. Please put your house in order and phase out whaling." The others will then follow suit.
I agree with the hon. Member for Putney that we should make clear to the Spanish that we shall have no truck with them and that we shall not accept them in the EEC until they stop their whaling activities. I do not deny the Eskimos their odd whale or two; they are entitled to it. That is their way of life. With that exception, the right hon. Member for Dudley, East (Dr. Gilbert) and I want a total ban.
I recognise that the Government have made a susbstantial step in the right direction. The right hon. Member for Dudley, East rightly said that the Labour Government did not do that. The Government have done it and are to be congratulated. Please keep up the pressure.

Mr. Robert Banks: It is a pleasure to hear so many references to this Government in such good terms and the praise that has been showered on them. I join with those who have congratulated the Government on their pioneering efforts in the EEC to do something positive about a matter that has caused a great deal of concern to a great number of people.
I should also like to congratulate my hon. Friend the Member for Watford (Mr. Garel-Jones), who put down an early-day motion—I see that he has had to leave the Chamber—which enabled us to focus our minds on this subject and was a response to a widespread feeling in the country that something had be done about this rare and endangered species. A number of schools in my constituency took an active interest in the campaign. As a campaign, it was a highly successful operation and was conducted extremely well.
Various hon. Members have referred to the position of Japan and the Soviet Union. Tonight we are illustrating the benefits of being a member of the European Community. Through our membership, we have been able to bring this about, not just as a single country but as a member of a partnership. We have been able to involve our partners in that. That gives us a strengthened position when it comes to dealing with Japan and the Soviet Union, because it means that we are in a trade-off position. We are talking about trade and quotas and about reaching trade agreements.
When this matter has been brought forward in January 1982, we shall be in a position to insist on certain regulations as regards our trade with those countries. I hope that we shall be able to do that.
One of the spin-offs of this campaign has been the development of substitutes for sperm oil. I very much hope that it is the case that British companies have been involved in that. There is a future, I should have thought, for such products on a world wide basis. I hope that the Minister will be able to say something about the role the British companies can play in that work.
There is one aspect of the products listed in the annex that causes me same concerti. I refer to leather products that have been treated with whale oils, as compared with those treated with non-whale products. I am not sure that I could tell the difference. The right hon. Member for Dadley, East (Dr. Gilbert) gave a good illustration and pointed out that special gloves for pilots which were produced by the Ministry of Defence had been treated with the substitute oils. Presumably the differences were so slight that it would have been difficult to tell which leathers had been treated, in which ways. I should have thought it was important to ensure that adequate labelling was affixed to leathers treated with sperm oil. I hope that my hon. Friend tie Minister will take up that point with his partners and ensure that there is clear identification of the goods which have been treated with whale products and can be restricted under the licensing system, which is now being introduced.
Finally, I wish to ask my hon. Friend a purely technical question. I wonder whether he can tell us how many People will be employed in issuing the import licences and something about the amount of work that that will entail. The employment aspect is good. Its cost is another. No doubt the cost should he recouped from sources that benefit from the regulations.
I end with this final welcome for the steps which are being taken. We look forward to greater efforts in the future, which I hope will lead to the banning of all whale fishing.

Mr. Tam Dalyell: Will the Minister give an undertaking that he will use unparliamentary language in relation to the Danes and tell them, in as picturesque terms as he can, that there is something rotten in the state of Denmark? The Danes lecture us on conservation and environmental issues year in and year out. On this matter I gather that they, more than the West Germans, are responsible for the EEC impasse.
I have a suspicion as to what the trouble may be. It is, in fact, that there is the problem not only of the International Whaling Commission but of the pirate and outlaw whalers. It is recognised that a significant proportion of the world's whale catch is being made by vessels which neither come under the jurisdiction of the IWC nor belong to the fleets of recognised non-member whaling nations. They operate under flags of convenience and have no direct connections with their ports of registry or with any recognised whaling nation.
I refer to the well-known position of the Government of the Seychelles because, as the hon. Member for Watford (Mr. Garel-Jones) said, the Indian Ocean is very important in this matter. The Seychelles has expressed concern about such operations because, first, unlike most commercial whalers, these pirates are totally indiscriminate, taking whales of any species without regard for size, sex or scientific status; and, secondly, they do so wherever they please, violating commission areas and divisions and national jurisdictions at will.
The Seychellois say:
Unregulated whaling and, in particular, that carried out by vessels under flags of convenience, is an assault on sovereignty, a disaster for conservation, a blatant subversion of the New Management Procedure and a severe blow to the International Whaling Commission's credibility".
At any moment in time, it is difficult to assess how many such pirate whalers are operating. But, as a measure of the importance of this trade, one such well-known vessel, the infamous "Sierra", discharged 1,329 tons of whalemeat during the last five months of 1978. That is fact; it is not speculation. Most of the spoils from this form of whaling appear to go to Japan, and imports from one pirate whaling company are included in the official Japanese customs statistics under Somalia for 1976 and 1977. If the Japanese have improved their ways, I shall be glad to hear it, but some of us remain very suspicious.
In 1978, the country of origin changed to Cyprus, with the heaviest import of whale meat, 2,776 tons, after the USSR and Iceland. However, the imports from Cyprus were second only to those from Russia in value, which suggests that only the best quality meat was taken.
What will be said to the Danes? Will they be told bluntly that they are behaving disgracefully in this matter? Secondly, what will be done about Cyprus, which is being used as some kind of depot or third base? Thirdly, as a number of my colleagues have asked, what will be done about the Spaniards in relation to accession? Now is the time to speak up in these matters. Having been extremely helpful to the Spaniards, we are perfectly entitled to ask them some direct questions.
I do not normally use precious time to pay tribute to my parliamentary colleagues, but my right hon. Friend the


Member for Dudley, East (Dr. Gilbert), a former Minister of State for Defence, really set about doing something and fought some of our mutual colleagues in a very estimable way. He talked about being 100 per cent. clear that there were substitutes for anything. The only problem is whether people are prepared to spend the money. When it comes to money in this connection, I say quite bluntly and sentimentally that I want our grandchildren to live in a world where the whale continues to exist.

Dr. Gilbert: My hon. Friend has been most kind to me. However, the Ministry of Defence did not have money to throw around. If it had been an extra cost on the defence Vote, I would not have succeeded in getting it through. These substitutes are available without any appreciable increase in cost.

Mr. Dalyell: I am grateful to my right hon. Friend. I shall not take up any more time other than to repeat the question asked by my hon. Friend the Member for Edmonton (Mr. Graham). We have vast documents and many ministerial letters on jojoba. What is being done by the Ministry of Overseas Development to establish the cultivation of jojoba in countries of the Third world with balance of payments problems and arid deserts? It is a very good substitute.

Mr. William Waldegrave: I shall make only two very brief points, one less serious than the other.
The first is to draw the attention of my hon. Friend the Minister to the extraordinary fact that the early-day motion sponsored by my hon. Friend the Member for Watford (Mr. Garel-Jones) has one quite unprecedented feature about it, which is that it is signed by the hon. Member for Bolsover (Mr. Skinner), and that, I think, makes it unique for an all-party early-day motion. I am sure that there are hon. Members even on the Government Benches who will not feel that the House has returned to its full strength until the hon. Gentleman is well enough to be back in his place.
The second point follows up a comment by the hon. Member for Rother Valley (Mr. Hardy). If evidence is brought to the attention of my hon. Friend that stockpiling is going on in this intervening year before the 1982 starting date, will he consider taking urgent action to stop it, perhaps by bringing forward quickly an amendment to the Endangered Species (Import and Export) Acts 1976? That might be one way of dealing with such a problem, and I ask him to consider such action.

Mr. Eldon Griffiths: I wish to ask my hon. Friend the Minister a number of quite specific questions. Will he undertake that the Government will themselves ensure that their own procurement agencies no longer purchase any commodity containing whale products? I appreciate the difficulties of enforcement, but I ask him to say now that he will instruct the PSA not to purchase products that contain whale oil, that he will advise—in fact, require—the nationalised industries not to do so, that he will approach the Local Authorities Managements Services and Computer Committee so that no local authority procures such products, and that he will,

of course, give the assurance that the Ministry of Defence does not do it. I think that that covers the wide range of public procurement.
I should like my hon. Friend to go further and say that the Government will use such influence as they have, which is considerable, to ensure that perfume and toiletry manufacturers also do not use whale oil and that if they do they should advertise the fact that they include such products among their manufactures.
I became aware of whales a long time ago in the Galapagos islands, where I first saw them. Later, I had the distinction of leading the British delegation for a considerable period at the United Nations conference on the environment in Stockholm, where I made up my mind that we must preserve the whale in the interests of humanity as well as in the interests of the whale itself.
I am delighted that the Government have gone as far as they have. I wish my hon. Friend the very best of luck in his meeting on Friday, which may not be an easy one. I hope he will not fall for the blandishments from both sides of the House to say tonight that the United Kingdom would adopt a unilateral position in the event of his not getting agreement. In my view, his purpose should be to get agreement, and he will not be so likely to get it if he says to the other countries present that the United Kingdom will go ahead anyway. That would be the last way, diplomatically, of getting an agreement. But, in the event that he is unsuccessful—and I do not believe that he will be—I hope he will then feel free to come back to the House and say what in those circumstances he could tell us that would take the matter further.

Mr. Fox: I am grateful to the House for the considerable interest that has been shown and for the many points that have been put to me. It is doubtful whether, in the few minutes available to me, I shall be able to answer all the points. I asked for a strong line to take to Europe on Friday. It strikes me that many hon. Members would ask me to do the impossible, even going so far as to use unparliamentary language to the Danes. As a Yorkshire Member, that would be easy. Whether I should have any influence is doubtful. I shall bear in mind the encouragement of the hon. Member for West Lothian (Mr. Dalyell).
I wish immediately to put right the suggestion that the Government are not going far enough. I am grateful to my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths), who put the matter in a nutshell. The important thing is to reach agreement on 95 per cent. of what we are seeking to do. It is incredible that we should disagree about the margins. I do not think that there should be any disagreement.
I was asked about the further extension of the article. That has been introduced since the draft regulation was made. I am hopeful that on Fridy we shall agree that any member State that wishes to go further should be entitled to do so. I do not mean to infer that we do not want to go further. For example, the Danes were fussed about whale teeth. They asked for them to be included, but they were excluded because they could not be identified as such against the teeth of other amimals. They then withdrew their insistence. Britain controls imports of all animal teeth under the Endangered Species (Import and Export) Act 1976. Britain is ahead in many areas.
The right hon. Member for Dudley, East (Dr. Gilbert) pointed to his record as a Minister at the Ministry of Defence. I accept that he achieved a considerable amount. But I do not accept that British industry has not made a move in that direction. It was suggested that the leather industry is dragging its feet. That is not the case. It is probably true that our industry has gone further than any other. That is why, on reflection, we agreed to imports of rather goods being included. Our industry is capable of fleeting the improved qualities that will be demanded once he directive has been approved.
I welcome the support of the hon. Member for Edmonton (Mr. Graham). I assure him that we shall continue whatever pressure we can to achieve what we all want—which includes, as many hon. Members said, a moratorium on the killing of whales. I did not go into great detail about that in my initial speech. We know that that s what we all seek.
The question of substitutes is not as easy as we think. The United States is having problems. The hon. Gentleman drew attention to one substitute that can be grown only in arid conditions. The United States is not finding that the solution comes from that means alone. We have a record of the amount of whale oil imports this year. It is minute compared to a few years ago. We are satisfied that industry is facing up to the challenge and is already winning. I am sure that the House will welcome that.
A number of hon. Members raised the question of the (late of 1 January 1982. I realise that it is not the date that we wanted. However, it is the date wanted by the majority of member States. Once the date has been agreed and the directive passed, member States will work towards that. They will not wait until 1 January 1982 to do something about it. I take note of what hon. Members said about the date.
I welcome the observations of my hon. Friend the Member for Portsmouth, North (Mr. Griffiths) and I am particularly grateful for his practical approach. The hon. Member fir Rot her Valley (Mr. Hardy) understood what I meant when I spoke about wheeling and dealing. I am sure that that is not European language, but it describes some of the activities that take place. The important thing is to achieve success, and I am sure that we shall do that on Friday. I have already dealt with the other matters raised by the hon. Member.
My hon. Friend the Member for Watford (Mr. Garel Jones) expressed his anxieties about the date. If we see abuse of the proposed regulation, we shall take action. I have commented on what the right hon. Member for Dudley, East said about the Ministry of Defence taking action. I believe that industry is doing likewise. I note what my hon. Friend the Member for Putney (Mr. Mellor) s dd. I welcome his congratulations. We note the activities in Spain,

Mr. Dalyell: Will the Minister get the Foreign Office to raise the matter with the Spaniards?

Mr. Fox: The hon. Gentleman must accept that Spain it anxious to join the EEC and it is important to get the ban agreed before Spain joins. As a member State, it would be bound by the agreement. I think that what the hon. Gentleman is seeking will be achieved. I can say nothing about Cyprus, but I note what has been said.
I am grateful to the hon. Member for the Isle of Wight (Mr. Ross) for his comments about the Government's efforts, and I take note of the abuses that he claims are carried out by the Russians and Japanese.

Mr. Stephen Ross: I forgot to mention in my speech that the House ought to pay credit to Greenpeace and the crew of the "Rainbow Warrior", who are brave people who have fought this campaign for a number of years and take great risks in doing so.

Mr. Fox: I note what the hon. Gentleman says.
My hon. Friend the Member for Harrogate (Mr. Banks) congratulated the Government on their pioneering efforts. I hope that I have convinced him that British companies, particularly in the leather trade, are in the lead in the development of substitutes. We shall look carefully at what my hon. Friend the Member for Bristol, West (Mr. Waldegrave) has proposed. My hon Friend the Member for Bury St. Edmunds raised a number of interesting matters. I promise him that I shall look at them carefully.
It is important that on Friday we should achieve success in the draft directive. Thousands, perhaps millions, of people throughout the world will welcome what is to be achieved. Hon Members have mentioned America and Australia taking action on their own, but perhaps the most significant event will be the EEC, representing millions of Europeans, taking action. This is not the end but just the beginning of ensuring the survival of a species which, as the hon. Member for West Lothian said, our grandchildren have every right to see.

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

Question agreed to.

Resolved,

That this House takes note of European Community Document No. 6873/80, the Department of the Environment's Explanatory Memorandum of 4 June 1980 and the Suplementary Memorandum of 2 December 1980 concerned with common rules for import of whale products; and welcomes the Government's initiative for this Regulation which both significantly increases protection for whales and takes due account of the needs of affected interests.

Employment Protection

The Under-Secretary of State for Employment (Mr. Patrick Mayhew): I beg to move,
That the draft Employment Protection (Variation of limits) Order 1980, which was laid before this House on 1 December, be approved.
The draft order has been laid in accordance with section 148 of the Employment Protection (Consolidation) Act 1978 which requires the Secretary of State to carry out each year a review of the limits relating to certain payments made under that Act.
This is the fourth review since the legislation was introduced in 1975. The relevant limits relate to the weekly earnings limit laid down for the purpose of calculating redundancy payments and the basic and additional unfair dismissal award, certain debts in relation to the insolvency provisions of the principal Act: and guarantee payments to workers on short time and temporary lay-off.
The Secretary of State for Employment has by law to take account of three factors in carrying out this review and


in reaching a decision. The first is the general level of earnings obtaining in Great Britain at the time of the review; the second is the national economic situation as a whole; and the third is such other matters as he thinks relevant.
If, as a result of the review, the Secretary of State considers that any of the limits should be changed he must lay before each House the draft of an order giving effect to his decisions and, where he decides that a limit should not be varied, he must lay before each House a report giving his reasons for not varying those limits.
The upper limit of the compensatory award for unfair dismissal—which also applies to compensation for race and sex discrimination and is relevant to compensation payable in cases involving unreasonable expulsion or exclusion from a trade union—is not subject to annual review under the principal Act.
As part of the review, the Government consulted a wide range of organisations for their views of the limits, including the upper limit. In the light of these consultations, we have decided that the limits of payments for redundancy, for basic and additional awards for unfair dismissal, and payments under the insolvency provisions of the Act should be increased. The proposed changes are set out in the draft order.
If the order is approved in both Houses the changes to the limits will come into effect on 1 February 1981. This follows the established pattern. My right hon. Friend the Secretary of State also reviewed the upper limit of the compensatory award for unfair dismissal which was increased both last year and the year before, but in the light of his consultations he has decided against any increase.
As I have just mentioned, in reaching decisions on the limits one of the matters which my right hon. Friend has to take into account is the general level of earnings obtaining in Great Britain at the time of the review. The latest month for which final figures are available is August. The August figure showed an increase of 21.7 per cent. over the previous 12 months. The provisional figure for September has been set at 26 per cent.
Nevertheless, my right hon. Friend also has to take into account the national economic situation as a whole. We have to weigh the need to protect employees on the one hand against the need on the other hand to keep within tolerable bounds the burdens which the Act imposes on employers when the importance of keeping employers in business is today so vital.
Like the Labour Government before us, the Government have concluded that economic considerations prevent our increasing the weekly earnings limit to an extent that would fully restore its original purchasing power or even the purchasing power that it had at the time of the last review. We have decided that the maximum increase in these limits that can be justified in the present economic circumstances would be about 8 or 9 per cent.
Accordingly, we propose to increase the limit on weekly payments from £120 to £130 — an increase of 8·3 per cent. For redundancy payments, this means that the new maximum redundancy payment under the statutory provisions will be £3,900—that is, 30 weeks at £130 which would be the amount due to a man of 61 or over who has served 20 years and is entitled to one-and-a-half weeks pay for each year of service. The increase to £130 will also apply to certain payments under the insolvency provisions

of the principal Act. The additional cost to the redundancy fund for the year 1981–82 is expected to be about £2 million.
The increase in weekly limits also applies to the basic award of compensation for unfair dismissal. I remind the House that this part of an unfair dismissal award is intended to reflect broadly the amount of redundancy payments which would have been received by an employee if he had been made redundant instead of being unfairly dismissed. This is the reason why the Act links these limits. It follows that the limit should remain in line with the redundancy payments earnings limit. The new maximum in the basic award therefore remains exactly the same as the maximum redundancy payment of £3,900. The additional award which a tribunal may award where an employer has refused to comply with an order for reinstatement or re-engagement is also currently subject to a £120 weekly earnings limit, and is proposed to be increased to £130.
We propose to increase the daily limit on guarantee pay from £8 to £8.75—an increase of 9·4 per cent. We have decided not to increase two of the limits on guarantee pay—namely, the specified number of days in any relevant period, and the length of that relevant period. The reasons for that decision are given in the report which was laid at the same time as the draft order. They are, briefly, that the maximum number of days for which payment is required to be made—that is, five days—still seems to strike a fair balance between the employer's obligations and the employees' rights.
With regard to the relevant period, the fixed period prescribed by section 15 of the 1978 Act was amended to a rolling period by section 14 of the Employment Act 1980 which came into force on 1 October. It would not, therefore, be appropriate to make any further changes at this review.
To sum up, the increases take account of the rise in average earnings, but are inevitably greatly influenced by economic and employment considerations. I commend them to the House.

Mr. Harold Walker: As the Minister has reminded us, this is the fourth consecutive annual review of the payments that are covered by the order. However, the hon. and learned Gentleman did not say that the percentage changes contained in the order are the lowest and the most miserable since the procedure was introduced. The effect of the order is to slash the real value of the payments that are within the order's scope. The order provides for cuts in redundancy pay, cuts in compensation awards for unfair dismissal, cuts in the sums paid to protect workers whose firms may have gone bankrupt and cuts in the pay of workers on short time.
I shall recapitulate briefly on the short history of these matters and demonstrate what has happened to these monetary payments over the past four years. The most significant of the three factors that affects the review and the one touched upon by the hon. and learned Gentleman—it is the only one that is quantifiable—is the prevailing earnings level.
The first review was in 1977. The then year-on-year earnings increase was 7·2 per cent. That itself is a sad commentary on the subsequent movement of earnings and wages. In that year I, as the Minister responsible, increased the guaranteed pay limit by 10 per cent. and the


other payments by 25 per cent. In 1978, against an earnings increase of 15 per cent., I increased all the limits covered by the order by only 10 per cent., but additionally increased the maximum compensatory award for unfair dismissal by 10 per cent. On that occasion the Conservative Opposition denounced me and voted against the order on the ground that the increases were at least twice as high as they thought they should be.
In 1979, against an earnings increase of 14·4 per cent., the present Government, then the incoming Government, increased the guaranteed pay limit by only 10·3 per cent. and the other payments by only 9 per cent. I said in Committee:
'the going rate for pay settlements and the continued sharp rise in the RPI means that the benefit of the proposed increases will soon wither and that this will be the second consecutive year when the adjustments in these monetary limits will fall significantly below that which might be justified by the general earnings level alone.
I added:
I appreciate that the Secretary of State has to take into account other factors beside the general level of earnings, such as the economic situation at the time. But we cannot continue year after year accepting that the economic difficulties of the day—there will always be economic difficulties of some kind—must be a good reason for ensuring that the continual erosion of the benefits that Parliament has seen fit to grant in respect of redundancy payments, guaranteed pay and the other amounts covered by the order."--[Official Report, Standing Committee on Statutory instruments, &amp;c.. 11 December 1979; c. 9.]
I obviously wasted my breath. This year the earnings increase is 26 per cent., and yet the guaranteed pay increase is a mere 9·4 per cent, and the others even less, at a little over 8 per cent. The retail price index, which I suppose is within the other relevant matters that the Secretary of State has to take into account, is running at over 15 per cent.
The prime criterion laid down by the Act is the level of earnings, and yet one can reach the conclusion only that the level of earnings is now seen by the Government to be an irrelevance. One could not otherwise explain the enormous discrepancy between a year-on-year earnings increase of 26 per cent. and yet an increase in these limits of between 8 and 9 per cent. I challenge any hon. Member to identify any relationship between the figures for percentage increases contained in the order and the movement of earnings which I have described and which has been conceded by the Minister.
To restore redundancy payments, which is the principal payment and to which, as the Minister fairly said, other payments are geared, by comparison with earnings to the level originally provided for by Parliament would require an increase not to £134, the figure in the order, but to over £200 in the weekly earnings limit. That applies equally to compensation for unfair dismissal and to payments in insolvency. Instead, these payments, as I have said, have been cut and cut again.
Last year—and again we heard an echo of it this year—the Minister talked of wishing to strike a fair balance between the interests of employees and the ability of employers to pay. However, I ask what can be fair about a situation where year after year employees are having their rights diminished and employers are progressively released from their obligations. None of us can be insensitive to the problems that have been created for employers by this Government, but the Government, however, seem totally indifferent to the plight of the employees to whom the order applies—those who have

been made jobless, perhaps in some situations because of the deliberate action of their employer, and for whom there is no prospect of fresh employment in present circumstances.
A fair course might have been at least to seek to maintain the status quo, but that would have called for increases two to three times greater than those that are provided for in the order. Instead employers are to be cushioned at the expense of those they sack unfairly, who are losing their jobs because of redundancy or who have been put on short-time working. That burden has been shifted on to the backs of the newly unemployed.
It should not be overlooked that the Government have a direct financial interest in the matter before the House. The level of redundancy pay—the payments made to employees under the insolvency provisions of the Employment Protection Act—can have a significant effect on the size of the redundancy fund and the outflow from the fund. Employers can claim rebates from the fund amounting to 41 per cent. of the cost of redundancy payments, but the money in the fund is used to offset the public sector borrowing requirement, and that amount at present stands at more than £100 million.
When I stood at the Dispatch Box and said, as I did just now, that the fund was used to offset the public sector borrowing requirement, Members of the Conservtive Party now holding ministerial office accused me in the most intemperate language of robbing the employers. The hon. Member for Brentford and Isleworth (Mr. Hayhoe), who is now the Minister with responsibility for the Army, with the present Secretary of State for Employment egging him on, denounced me for abusing and misusing legislation. The right hon. and hon. Gentlemen went into the Lobby opposing me for doing precisely what the present Government are now doing. At that time the sum did not stand at £100 million; it stood at £60 million.
If the Government had really wanted to ease matters for employers, they could have done what they demanded of me the last time that we discussed these matters on the Floor of the House—increased the employer's rebate from the fund. What did the Conservative Party spokesman say on that occasion? The hon. Member for Brentford and. Isleworth said:
It seems that Department Ministers are so craven and lily-livered in their approach that they are not able to insist that the rebate is raised from its present level of 41 per cent. to 50 per cent. without further delay."—[Official Report, 28 November 1978; Vol. 959, c. 370.]
The Conservatives have been in Government for nearly 18 months, and the rebate is still 41 per cent. Who now is "craven and lily-livered"? Conservative Members are hanging their heads in shame and saying nothing.
When we last debated a variation of limits order, the Under-Secretary of State for Employment said that the raising of the level of rebate was "under active consideration". He said "I mean that sincerely". The hon. Gentleman nods in agreement. But on 27 November he said in reply to a parliamentary question from me that the Secretary of State no longer had plans to do so. That was after all the sound and fury in the House two years ago. We shall know what credence to attach to the hon. Gentleman's sincerity in the future. The House is entitled to a statement tonight about those matters.
Last year the Government made a marginal change in the employers' contributions to the fund—a drop in the flood tide of insurance contribution increases that have


now hit employers. But reducing the income into the fund is no help to an employer when he has to pay substantial sums in redundancy payments. It may not be out of place to recall—as I did last year—that one of the important factors that I took into account in 1978 when the then Labour Government looked at the income and outgoings of the fund was our commitment to legislate for a new short-time working compensation scheme which would be more permanent and generous than the limited scheme that we introduced in advance of the statutory scheme, which, in modified form, has been maintained by this Government.
That more generous and permanent scheme was to have been financed, in part at least, from the redundancy payments fund. For that reason, it was necessary to have a strong balance in the fund. But on taking office the present Government almost immediately abandoned the scheme, thus denying its benefits to the scores and perhaps hundreds of thousands of workers who are suffering reduced pay packets because of short-time working. The cash that might otherwise have helped to keep them in employment and to sustain their standards of living has been pocketed by the Treasury.
We had a social objective in mind when we reduced the rebate, but the Government have prostituted that to their Friedmanite principles. I hope that the Minister will feel inclined to comment on those matters before the end of the debate.
One other matter has been drawn to my attention tonight arising from short-time working and redundancy pay on which I would welcome the Minister's comments. My hon. Friend the Member for Barking (Miss Richardson) has received a letter from the divisional organiser, division No. 6 of the foundry Section of the Amalgamated Union of Engineering Workers. I shall quote the relevant part of the letter. The divisional organiser expresses his concern
about some stories coming from usually reliable sources in respect of the Redundancy Payments Act and the compensation for members arising from that. I am given to understand at the moment that where short time working is in operation at present and a redundancy situation follows, members' redundancy payments will be counted on any short time working programme for any extended period. As this Government seems to govern by decree rather than the normal amendments endorsed in the House of Commons, it is extremely difficult to get information at this time. Examples are the alteration, without any notice or consultation, to the short time working contract and a number of other items of which you are only too familiar.
I do, not wish to elaborate on that because the relevant point on which I hope the Under-Secretary of State will comment is the following:
I am given to understand at the moment that where short time working is in operation, and a redundancy situation follows, members' redundancy payments will be counted on any short time working programme for any extended period.
I very much hope that the Minister will clarify the position and set at rest the anxieties reflected in that letter.
I shall resist the temptation to comment further on the matters before the House, and conclude by repeating my condemnation of the Government—just and deserved condemnation—for deliberately and unjustifiably worsening the circumstances surrounding the loss of employment by working people. I shall not advise my hon. Friends to vote against the order, despite the inclinations of some of them, because to do so would put us in a Catch 22 position.
Although the limited increases amount to a cut, their denial to working people would make the position even worse.

Mr. David Penhaligon: The right hon. Gentleman has made an interesting speech, but I am not clear on one point. Is he condemning himself when he was in Government or the present Government when they were in Opposition?

Mr. Walker: The hon. Gentleman cannot have followed my point. I explained that in the first year of the review I massively increased the payments under the order. The following year, despite the fact that the then Government had a pay policy which sought to limit pay increases to 5 per cent., I provided for a 10 per cent, increase, and was denounced by the Conservatives for doing so. They voted against us because of the amount of the increases.
In the adverse circumstances of the time I was the first to acknowledge that we were in effect diminishing the value of the payments. I was prepared last year to agree to these matters being discussed in Committee instead of taking up the time of the House and dividing the House. I said then that we could not continue year after year to erode the benefit that Parliament had seen fit to provide.
This year we have the most massive cut in the benefits since they were introduced. There is a world of difference between limiting the increases to 10 per cent, in times of extreme economic adversity, compared with a year-on-year earnings increase of 15 per cent., and limiting them now to 8 per cent., compared with a year-on-year earnings increase of 26 per cent. That is a massive reduction in their value—for the third year running.
I have honestly acknowledged that I was responsible in 1978 for an order that did not match the increases with the year-on-year increase in earnings. The hon. Gentleman is entitled to say that I should hang my head in shame, but I hope that I am being absolutely frank with the House.
The position is becoming worse and worse. The link between the earnings level and the increase provided for in the order seems to have been completely abandoned now. That link was the prime criterion that we wrote into the Employment Protection Act 1975.
The Government deserve condemnation. I have said that I advise my hon. Friends not to divide the House, because we might deny working people even the limited increases provided for in the order. But I very much hope that everything that is said in the debate will be understood—warts and all, if the hon. Member for Truro (Mr. Penhaligon) wishes—by working people and that they will be aware of this further stage in the Secretary of State's step-by-step, slice-by-slice attack on their standards. I hope that it will be noted that this is an attack on people who stand most in need of the benefits that Parliament sought to confer on them by the legislation that is now being worsened by the order.

Mr. Douglas Hogg: In view of the lateness of the hour, I shall confine myself to one question and one comment.
Does my hon. Friend the Minister have it in mind to increase the upper limit of the compensatory award payable for unfair dismissal? If so, when may we expect such an increase?
My comment is on the speech of the right hon. Member for Doncaster (Mr. Walker), a curiously intemperate speech which is typical of the speeches that I have heard from the right hon. Gentleman since I have been a Member. His speech ignored one rather important aspect of the compensation payable for unfair dismissal. He talked at great length about the limited increase in the basic award. What he failed to note and failed to inform the House about was the provisions of the compensatory award for those who are unfairly dismissed. As he well knows, where an employee has been dismissed unfairly and claims compensation, he can recover as part of his compensatory award his net loss up to a very considerable figure, running into many thousands of pounds. That is not affected by the limitation of £130 per week, which is simply and solely the method for calculating the basic award, which is to be distinguished from the compensatory award.
I am sorry that the right hon. Gentleman did not dwell on these matters, for by failing to do so he has misled the House and will, I think, mislead any who have the misfortune to read his speech hereafter.

Mr. Stan Crowther: If we honestly believe in the principle of compensating people for losing their jobs through no fault of their own, surely it is the duty of the Government and the duty of Parliament to take steps to ensure that the value of the compensation they receive is maintained. It is a very basic principle and is the kernel of what we are debating tonight.
The Government clearly do not accept that view and are quite happy to see the value of the compensation eroded year by year. If that is their policy and they are in favour of devaluing the compensation that is available for people in these unfortunate circumstances, they ought to come out clearly and say so. I heard no sentence in the Undersecretary of State's speech tonight which contained any kind of justification for cutting down the value of the compensation that should be available to people who lose their jobs in such circumstances.

Mr. Jim Craigen: Is not the Government's embarrassment due not to the fact that redundancies are escalating at such a considerable rate these days but to the fact that the cost of redundancy is growing?

Mr. Crowther: My hon. Friend is absolutely right, and I was intending to come to that point. The Government have already reduced the scope of compensation for unfair dismissal in the Employment Protection Act. Having reduced the scope, they are going a stage further and reducing the value in relation to rising costs and rising levels of earnings.
My hon. Friend was absolutely right in his intervention. The order is yet another example of the way in which the Government are trying to make working people pay for the failure of the Government's economic policy, and especially that bit of the policy which was at the heart of the Conservatives' election campaign to reduce the public sector borrowing requirement.
The net effect of putting so many people out of work, causing so many redundancies, putting so many people on short time, and so on, has been greatly to increase the PSBR. Any way that the Government can find to whittle

away a few pounds by cutting their liability for redundancy payments, for example, they eagerly grasp, even though the amount in terms of total Government expenditure must be very small. But the effect on the people individually concerned is very considerable.
The Government ought to understand that making people redundant and putting people on short time is an inevitable consequence of the policies that they are now following in cutting public expenditure on labour-intensive operations such as local government and the Health Service. This is bound to have the effect of making more people redundant and putting more people on short time, thus increasing the demand for compensation under the very type of order that we are debating tonight.
This order is another part of the long process of whittling away the protection which people have enjoyed, but are no longer to enjoy in future according to this Government. The Government ought to be honest and tell the public that their deliberate policy is to reduce the protection which working people have enjoyed. This is the Government who claim to be great supporters of the rights of the individual. All the time, at every turn, they are eroding the rights of the individual.
My right hon. Friend the Member for Doncaster (Mr. Walker) has pointed out the Government's financial interest in this matter, because of the admittedly minor contribution that they have to make to redundancy payments. They are depriving themselves of a substantial source of revenue in the form of income tax and national insurance contributions from those whom they are putting out of work by their economic policies. We go in a circle. The Government find themselves short of a substantial amount of revenue because of the number of people on the dole and at the same time they put up expenditure by paying people to be out of work. This puts them in difficulty so that they have to try to cut down, not only on unemployment and sickness benefit but on redundancy pay. It is pathetic.
I fully understand the considerations which the Secretary of State must bear in mind in fixing these variations and I understand that the retail price index is not specifically mentioned as one of those. Surely we are entitled to expect that he will take that into account. The fact is that people out of work or on short time still face precisely the same increases in prices as those who are still at work. Yet the order seems to take no account whatever of the current rate of inflation.
As my right hon. Friend pointed out, when these matters were being debated two years ago when he was responsible for introducing the corresponding order, the then Labour Government were strongly attacked by the then Tory Opposition because they were proposing to update, the limits to a level which was higher than the figure the Government had in mind for the increase in earnings. Now, the roles are reversed but the basic position is the same. Once again, it is the Conservatives who are opposing the more generous increase and it is the Labour Party, albeit this time in Opposition, which is in favour of a more generous attitude towards those who find themselves in this unfortunate position. Any civilised society must accept that social justice costs money. It is hypocritical to accept the forms of social justice and to be unwilling to meet the costs.

Mr. J. F. Pawsey: It is worth reiterating that the increase still amounts to between 8½ and 9½ per cent, and it reflects the anticipated rate of inflation in the spring of next year. I also believe that it represents the determination of Government to get to grips with what I consider to be the real problem of our time—inflation. Inflation destroys not just savings and profits, but jobs. One of the principal concerns of the House at this time must be employment. The control of inflation must be the first priority of any Government who have the serious intention of getting our nation's economy on anything resembling an even keel. Reducing the rate of inflation will in the long term clearly benefit industry and safeguard employment. It is also necessary to ensure that redundancy payments reflect the ability of industry to pay them. There is no point in seeking to impose high levels of payments if industries cannot afford to meet those payments. High levels of redundancy payments mean just another on-cost for industry, another overhead, and they are an imposition at a time when industry is least able to afford it.
I am still involved in industry, and I doubt whether industry can afford increased payments at this present time. If we regard industry as a golden goose, can we really afford to see that goose choked by being required to fund higher redundancy payments? The Employment Protection Act is already regarded by many employers as an employment restriction Act. Many employers whom I know personally will not recruit labour because of the problems that might be encountered should an order book shrink through no fault of their own.
This is just another cost that home employers must bear. It is a cost not always borne by overseas competitors. The difficulties encountered in winning and perhaps later in holding orders can mean fewer jobs, and the result of this will be less work and lower profits. I put it to Labour Members that profit is not the dirty word that they sometimes imagine it to be. The Opposition may weep crocodile tears and wax indignant, but they should remember that it was under a Labour Government that profits were first squeezed through a high public sector borrowing requirement. Profits were also squeezed artificially through the work of the Price Commission. The commission tried to tackle inflation by cosmetic measures, which represented no real attack on the basic problem of inflation.
The increase in redundancy payments makes it more difficult for companies and firms to stay in business. There is a clear choice: one can have either bigger and better redundancy payments, or fewer jobs. I do not believe that we can have the two together. There must be a clear decision in the House tonight. Either we pay more in redundancy payments or we go for more jobs. The priority in this House this evening, and for the months and perhaps years to come, must be to safeguard employment. In my book, bigger redundancy payments will equal fewer jobs.
There is a clear need to get industry back into profit, because it is from today's profits that tomorrow's jobs will spring. If we have a genuine desire to get this country back on to something like an even keel, we have to get industry back into profit.

Mr. Ronald W. Brown: That was an extraordinary dissertation on the

part of the hon. Member for Rugby (Mr. Pawsey), bearing in mind that under the Government to whom he has given his loyal support for the last 18 months unemployment has increased by 1 million in real terms, though I know that the fiddled figure is said to be 750,000. The real figure is about 1 million, and the hon. Gentleman has the effrontery to come to the House and say that he regards the redundant person as just another overhead.
The hon. Gentleman, mark you, Mr. Deputy Speaker, is still moonlighting. He still has two jobs, and this is the guy who talks about somebody being, as he put it in that rather beautiful Conservative phrase, "just another overhead" and says "You must not kill the goose that lays the eggs". The hon. Gentleman has given a few hostages to fortune tonight.

Mr. Pawsey: Would the hon. Gentleman care to comment on the fact that under his Government unemployment doubled? I wonder what hostages the hon. Gentleman gave to fortune during that period of office.

Mr. Brown: I would not press the analogy too far if I were the hon. Gentleman. We have gone from just under 1½ million to 2½ million unemployed in 18 months. If he is a betting man, he had better watch his shirt because he is likely to lose it. The hon. Gentleman referred to unemployed people almost as chequers on a chequer board. The scandalous part of his contribution was his total insensitivity. For someone who is moonlighting and is on the gravy train, he had a damn cheek to make the comments that he made.
The Under-Secretary of State said that the object of the order was to keep employers in business. Article 3(5) of order provides:
The variation … shall have effect—

(a) as respects a lay-off or a keeping on short-time where the relevant date (as defined in section 90(2) of the 1978 Act) falls after this Order comes into operation".

My right hon. Friend the Member for Doncaster (Mr. Walker) and I were discussing whether that takes account of short-time working. I am the parliamentary adviser to the Furniture, Timber and Allied Trades Union—unpaid, I should add, in case the hon. Member for Rugby should say that I am moonlighting. The furniture industry is now on short-time working to keep firms and jobs going so that, if the economy ever turns up, they will be able to carry on. Do I understand that if a firm is unable to maintain its stability and has to declare redundancies the redundancy payments will be based on the short-time working that has been going on?
I should point out that union members are co-operating with household name firms in the furniture industry in order to maintain those businesses and their jobs. Some of those firms are efficient and effective. High technology is being utilised and every conceivable attempt is being made to be competitive in markets at home and abroad. Yet they are still going broke. As I said, the union and the employers are co-operating to keep the firms going until the economy picks up.
If my interpretation of article 3 is right, the union must advise workers not to go on short-time because it is against their interests. If they are then made redundant, they lose all the way. The value of the redundancy payment will be less than the going rate. It will be less than the basis of the earnings rate that they had and, under the order, it will be less than the going rate that they should have had. They will lose on two counts. Therefore, the advice that the


union must give to workers is not to co-operate any more. If a firm looks as though it is going down, workers had better get out as quickly as they can to get the maximum redundancy payment. That is a crazy situation.
The real unemployment figure is 2·5 million, but the fiddled figure is 2·2 million. Yet we are creating circumstances in which we must advise employees not to co-operate with their employers, but to ensure that firms go out of business as quickly as possible because otherwise the Government will see that they are cheated of their just dues.
My right hon. Friend the Member for Doncaster said that we should not vote against the order. If my interpretation is right, people will be not only put on the dole, but cheated at the same time. There is no rhyme or reason in the order. Unless I am satisfied, my right hon. Friend's plea will fall on deaf ears. There is no point in frying to pretend that a gnat's whisker is being obtained out of this shabby order when a chap is being cheated and looked in such a way.

Mr. David Penhaligon: I have always supported the Redundancy Payments Act 1965. It was enacted by a Labour Government. It is one of the social reforms that has proved well suited to its task. It was welcomed by industry. Indeed, I have spent most of my time in industry. It is completely justified. If anything, the House should look forwards to increasing payments. I shall explain why.
There is a better case for increasing redundancy payments in real terms now than there might have been in 1965. Today, the chances of a man finding a new job are dramatically less than they were in 1965. I cannot recall the unemployment figure for 1965, but it was of a different order to that found today. A man in his early fifties, who his always exercised a skill that he acquired in his younger days, faces a traumatic experience when he suddenly discovers—as many will—that those skills are no longer required. Many never reconcile themselves to that experience, and fail to recover from it. I have always argued that the Redundancy Payments Act represented a genuine attempt by the Labour Government to give some rational form of compensation for that dramatic change in a man's life.
It is interesting to note how we have treated ourselves in the past few months. I am not as likely to be made redundant now as I was before the last election. If hon. Members, including Conservative Members, were rational, they would consider what the future would hold if they were to lose their parliamentary seats. Let us be honest. Some hon. Members will have to lose their seats if others are to become Members of Parliament. As we know from conversations with previous colleagues, it is a traumatic experience. On the whole, hon. Members are lucky. We have the skills, knowledge and contacts that the ordinary skilled man in my constituency does not have. I should like to speak up for the principle behind the Act. I support the Act. I should like the Minister to say that he supports the principle and the moral behind it.
It is difficult to find the money for such Bills. Nevertheless, we cannot cut everybody off because the Government are in economic difficulties. Today, they appeared to raise £1,000 million by putting up the national insurance contribution. I cannot believe that the Government cannot find enough money to bring the

amounts awarded level with inflation. The case in favour is overwhelming. It is socially and morally right. The House should increase compensation in real terms. Even if we move out of this crazy economic position, we shall face a series of decades in which people in their early fifties will be asked, to give up their jobs. Technology will change so rapidly that the skills learnt in a lifetime will become redundant.
The House should try to produce a humane society. In such a society, the case for compensating the unlucky fellow whose skills have become redundant is overwelming. The hon. Member who can stand up and tell us what skills will be redundant in 20 years' time is a very clever man. It is a roulette system. It is our duty to offer a satisfactory and intelligent insurance scheme for the man who draws the bullet in the Russian roulette of redundancy.

Mr. Ron Leighton: Like the hon. Member for Grantham (Mr. Hogg), I shall restrict myself to one question and one comment, in view of the lateness of the hour. Does the Under-Secretary agree that this is the third consecutive year that the real value of these benefits has been reduced in relation to the average level of earnings? If that is so, is the Minister proud of that fact? Is this now the settled policy of the Government? Is it part of Conservative philosophy and something to which we shall have to look forward increasingly in the future?
I remind the Minister of his words on 11 December last year, when he said:
I agree that we cannot go on holding down benefits indefinitely in the interest of the economic position."— [Official Report, Second Standing Committee on Statutory Instruments, &amp;c., 11 December 1979; c. 17.]
That was said last year, yet here we are, one year later, and the Minister revisits the scene of the crime and makes it worse. That is the only construction that I can put on the matter.
In August and September 1978, the average increase in earnings was 14 to 15 per cent., and we increased these benefits by 10 per cent. In the following year, 1979, when it appeared that the hon, and learned Gentleman was not very happy with what he was doing, the increase in earnings was between 14 and 16 per cent., and again we increased the benefits by just under 10 per cent. But this year, by August, wages had risen by just over 21 per cent, and the provisional figure for September is 26 per cent, but instead of even another 10 per cent, increase in nominal terms we are now down to an average of 8·3 per cent.
Therefore, it is the people who are hitting hard times, as the hon. Member for Truro (Mr. Penhaligon) has pointed out, whom we are hitting hard now.
When we were discussing social security contributions earlier today, the idea that was being canvassed was that those in work should be contributing towards those who are out of work. It seems to me that here we are doing the opposite, because it is those who are hitting hard times, being made redundant, being unfairly dismissed, who are having the burden put on them. Is this the sort of thing that the Government will be doing next year? Is it part of their philosophy?

Mr. Mayhew: The debate has been relatively short, but it has been marked by a real concern on the part of


many right hon. and hon. Members for the interests of those who, to take the words of the hon. Member for Truro (Mr. Penhaligon), have to draw the bullet of becoming redundant. Dealing with his question, let me say that the Government stand by the principle of the Redundancy Payments Act, as it originally was, its provisions now being incorporated, as the hon. Gentleman knows, into the Employment Protection (Consolidation) Act. We believe that it is an important and a proper function today that those who become redundant should receive compensation. However, I believe that my hon. Friend the Member for Rugby (Mr. Pawsey) had it right when he said that in today's economic circumstances we have to choose between higher redundancy payments and more jobs.
It would be very easy for the present Government to attain short-term popularity in this quarter by saying "Yes, by all means let us restore the purchasing power that the redundancy payments originally had in 1965–£40." We could strike a great posture, in so doing, for compassion and humanity and all the other things that are urged upon us and which are very desirable qualities in themselves. But if the consequence of that were so to increase the burdens of the employment protection legislation upon employers that not more but fewer jobs resulted and not more or even the same number of employers remained in business but fewer, the end result in terms of hardship for those who depend upon employment for their livelihood would be worse. It is that which the Government have in mind.

Mr. Harold Walker: Surely the hon. and learned Gentleman will acknowledge that the issue before the House is not the increase in real terms of redundancy payments but the reduction that is provided for by the order and was provided for by the orders of last year and the year before. The hon. and learned Gentleman will recall that I said that perhaps it might have been accepted by the House if the Government had sought to maintain the status quo, which is to maintain the real value of redundancy payments and the other payments provided for by the order, without increasing them.

Mr. Mayhew: Either the right hon. Gentleman was not listening to what I said or I had not made myself clear. I expect it is the latter. I was saying that it would be very easy for the Government so to increase the levels of the limits for payment for redundancy payments and for compensation for unfair dismissal that we restored the levels to the purchasing power that £40 had in 1965. This order is increasing those limits in money terms from £120 to £130.
When I opened the debate, I acknowledged that the order was not restoring the purchasing power of the levels either to what they were a year ago or, of course, to what they were earlier. The reason we are taking this course is not based on lack of compassion or lack of humanity. It is a reason based upon our belief that our overriding duty is to ensure that we do not so add to the burdens upon employers represented by the employment protection legislation that we drive more employers out of business.
I agree that the cost to the redundancy fund of redundancies nowadays is very great. It is depleting the redundancy fund at the rate of £15 million a month. It would be idle to deny that there are many employers who

are going out of business every month. We trust that this trend will shortly be reversed, but it is continuing at present.
What will it profit those who depend upon those employers who are still in business for their jobs and livelihood if we increase redundancy payments to a level that will drive further employers out of business? It is that which is at the root of the Government's policy. Everyone applauds the short-time working compensation schemes for the overriding reason that they enable employers to stay in business notwithstanding that they have hit very hard times. Once an employer goes out of business, it is trite nowadays to observe that it is very seldom that they can come back. It is important to keep them in business, and it is therefore important that they should not be driven out of business by over-heavy redundancy liabilities.
I invite the House to get into perspective what is taking place. I acknowledge that the full purchasing power is not being restored on a year ago. But only 10 per cent, of those receiving statutory redundancy payments earn more than £120 a week, and only 7 per cent, earn more than £130 a week. We are raising the limit to £130 a week. Only 7 per cent. earn more than that. So only a small minority of higher-paid employees would benefit by our raising the limit, as the right hon. Member for Doncaster (Mr. Walker) suggests, to over £200.
I take the point raised by my hon. Friend the Member for Grantham (Mr. Hogg). He reminded the right hon. Member for Doncaster that the compensatory awards take account of loss of wages, loss of benefits and expenses. They are payable in addition to the basic award and extend to a maximum of £6,250. Not only is it only a small minority of higher paid wage earners who will be affected by the failure to raise the limit to more than £130, but, in addition, there is a maximum of £6,250 that can be awarded under the compensatory award in respect of loss of wages, loss of benefits and expenses. That point is not covered by the order because of legislation passed by a Labour Government. There is a statutory obligation on my right hon. Friend the Secretary of State to review annually the basic award and the additional award, but there is no statutory obligation for him to review the compensatory award. My hon. Friend the Member for Grantham asked a question on that point.

Mr. Harold Walker: The hon. Member for Grantham (Mr. Hogg) accused me of misleading the House by not referring to the compensatory award. That award is not within the scope of the order. It would have been improper for me to raise the matter. If the hon. Member for Grantham is accusing me of misleading the House, it is a very serious charge. I hope that he will reflect on what I have said, namely, that the compensatory award is not within the scope of the order. Had I referred to it, you, Mr. Deputy Speaker, would have properly ruled me out of order. The compensatory award is the subject of discretionary powers vested in the Secretary of State. It is not being increased this year despite the increases in earnings and the retail price index. It is within the discretion of the Secretary of State. If he thought it proper to do so he could come before the House with an order. We should welcome that. However, it is not before the House and it would be wrong for me to refer to it. [Interruption.]

Mr. Mayhew: I hesitate to intrude. Last year my right hon. Friend increased the compensatory award to its


present level of £6,250 from £5,750. The year before that it was increased from £5,250 to £5,750. There is no statutory obligation to increase the award, or ever to review it, every year. However, my right hon. Friend did review ii and he consulted widely about whether it should be increased. In the light of the consultations, and bearing in mind that not only the TUC but the CBI did not recommend an increase this year, he decided not to increase it. That is the answer to the question raised by my hon. Friend the Member for Grantham
The right hon. Member for Doncaster asked me a question which was asked in a more detailed form by the hon. Member for Hackney, South and Shoreditch (Mr. Brown) relating to whether employees who are ultimately made redundant following a period of short-time working lave their redundancy pay calculated on the basis of their payment an the time when they were on short-time working. I think that that is the point in a nutshell.
The position is complex. A redundancy payment is based or a week's pay, which must be calculated in accordance with schedule 14 to the 1978 Act. That schedule provides three bases for calculation, depending on whether, under the contract of employment, the employee has normal working hours. No problem is likely to arise where the contract Specifies normal working hours, where the pay is not related to the work completed, and when no change is made in the contract with the onset of short-time working. Some problems could arise with piecework or shiftwork, or where there are no normal working hours.
Short-time working is not a new phenomenon. I am not aware of any problems having arisen in that respect in the 15 years that the redundancy payment legislation has been in operation. However, if the right hon. Member for Doncaster has specific circumstances in mind and will write to me about them, I shall gladly deal with them. On the scenario raised by the hon. Member for Hackney, South and Shoreditch I am advised that my answer is correct.
Article 3(5), to which the hon. Member referred, is merely a transitional provision, Its object is to state the date from which the new rates will apply. Sub-paragraph (a) deals with the redundancy payment that the employee is entitled to claim, after a period of short time or lay-off, by virtue of section 88 of the 1978 Act. Sub-paragraph (b) deals with the more normal redundancy payment arising from a dismissal. Previous orders have had similar provisions and no problem that I am aware of has arisen.
I hope that what I have said so far has enabled the House to see in a broader perspective than the right hon. Member for Doncaster painted the consequences of what we are doing. These are lower increases in real terms than have been made in the past, but the economic situation in which we find ourselves is, for complex reasons, worse than for a long time. It is a matter of the greatest importance that we do not unnecessarily damage the prospects of employers being able to remain in business.
The hon Member for Rotherham (Mr. Crowther) said that social justice costs money. Of course it does, but if social justice is to be lasting and effective it must be justice that will survive for more than a few months. One could say that it would be social justice—if one used so loose a term—to increase the awards to last year's values. But if that meant that after a short time the employers who have

to meet those payments could no longer remain in business and provide any jobs, I doubt whether justice would be seen to have been served.
I hope that I have dealt with the matters raised in the debate. The redundancy rebate was mentioned. Expenditure from the redundancy fund is counted within the public expenditure programme and income is included in the Financial Statement and Budget Report, together, with other income such as taxation. It follows, therefore, that the case for restoring rebate to 50 per cent, must be considered against other priorities is assessing demands on the public purse. Against that background, I do not" propose to attempt any forecast of when it is likely to be possible to restore the rebate to its former level.
For someone so sensitive to the charge of misleading the House, the right hon. Member for Doncaster was less than charitable to my hon. Friend the Under-Secretary who said last year that the question of raising the rebate to 50 per cent, was under consideration. So it was.

Mr. Harold Walker: "Active consideration".

Mr. Mayhew: Active consideration, if that makes any difference. I am not sure what passive consideration is. It was a little hard for someone as tender, fresh and wilting as the right hon. Gentleman to say that no one would believe my hon. Friend again. On reflection—active reflection—the right hon. Gentleman will regret those words.
I respect and understand the views of those who have regretted that we have not been able to go further, but I hope that I have been able to place the order in a broader perspective and I commend it to the House.

Resolved,

That the draft Employment Protection (Variation of Limits) Order 1980, which was laid before this House on 1 December, be approved.

World Information Order

Motion made, and Question proposed, That this House
do now adjourn.—[Mr. Berry.]

Mr. Cyril D. Townsend: If some people believe that I have picked an obscure topic for this, my twelfth Adjournment debate, let me at once disabuse them. I raise a matter which has profound implications for the free world. I raise a matter which strikes at ideas and ideals which have been fought for in the field and long cherished in this Chamber. If the principles of democracy are to survive in an increasingly hostile world, there must be a free exchange of information. The totalitarian State requires protection. The free State requires constant injections of the truth. We are engaged in a struggle for the hearts and minds of the people of this planet. We shall lose that struggle if our light cannot shine through the darkness that covers two-thirds of mankind.
I must make it clear that my shafts of criticism are not directed at UNESCO itself. I am vice-chairman of the United Nations Association political committee and I am full of praise for this international educational, scientific and cultural organisation. If it did not exist, it would have to be invented. My target is the dragon that it has produced —its new world information order.
At a conference in Belgrade a few weeks ago Britain and the West suffered a defeat of catastrophic proportions.
Surely it is right that the House should have an early debate on how that came about and how, having lost a major battle, we can turn the tide. Countries of the so-called Third world have complained for many years about the way in which their affairs are reported—or, more often, not reported. They feel, as The Times said in an editorial on 23 September, that
they are badly served by the present system of international reporting, since most of the main news organisations are western in origin and in orientation; they consider that information about developing countries tends too often to be superficial or sensational, and to focus on the shortcomings rather than the achievements of the countries concerned.
They want to build up their media to serve their national audiences and to present their news to the rest of the world. I respect that point of view and I agree that it is a legitimate one. My hon. Friend the Minister of State in his impressive speech to the UNESCO conference said much the same thing. I am most grateful to him for coming to the House at this late hour to reply to the debate.
Neither I nor my hon. Friend respects or agrees with UNESCO's proposed solutions—medicines 10,000 times more dangerous than the diagnosed disease. The cure is not less information but more of it, not more control by Governments but no control by Governments.
Rosemary Righter reported from Belgrade in The Sunday Times on 19 October. I pay tribute to her most able coverage of the conference and her earlier works. She wrote:
This challenge to the freedom of the press has been simmering for a decade at UNESCO, the UN organisation which, ironically, is required by its constitution to promote the free flow of ideas … Western governments belatedly woke up to the gravity of the political challenge six years ago when a Russian-backed resolution slipped on to UNESCO's agenda boldly asserting that states should have the power to control the contents of the news … These chickens have come home to roost at the UNESCO's conference".
The new "world information order" approved in Belgrade at UNESCO's twenty-first general conference is based on the work of a 16-man commission appointed by UNESCO's director general. The commission, led by Mr. Sean MacBride, the former Irish Foreign Minister, produced a report that has been brilliantly condemned by Lord McGregor, professor of social institutions at London university and chairman of the Royal Commission on the press.
I shall allow myself two quotes from Lord McGregor. He said:
Much of that report is a statement of familiar themes drawn from the so-called 'media sociology' produced by the radical left in recent years. From their point of view, the main function of the means of communication is to maintain the established order. They regard such concepts as freedom of the press and freedom of communication as mere fig leaves which conceal the real interest of the multinational Capitalist owners of the instruments of communication. Moreover, press and broadcasting is dominated by 'Western news values', and thus constitute a new form of cultural imperialism … The interim report reflects this view and is at pains to explain for politically unsophisticated readers why some earlier statements about freedom and the declarations of the United Nations can no longer be taken at their face value".
Lord McGregor added:
In such ways the interim report demonstrates that freedom is really tyranny and light another name for darkness. But then, abuse of language and the re-writing of history have been the habit of authoritarians throughout the ages.

How did it come about that MacBride's upside down proposals were accepted in the main at Belgrade and without a vote? According to The Times of 28 October,
Other Western countries shared the British concern, but evidently felt less strongly when it came to the decision. As a result, it was explained in Whitehall yesterday, Britain felt that rather than standing out in defiant isolation, it was preferable to go along with the rest of the Conference and fight another day.
Four questions for my hon. Friend spring out of the report. The first is, is it accurate? If so, why did Britain not make it clear that on such a fundamental question as freedom of the press it could not go along with the consensus, even if it was prepared to go along on other matters? Above all, how come that there was such an amazing lack of co-ordination among the Western countries? What is Britain doing now to secure better Western co-ordination for the next and far more difficult round of the battle in 1983?
The MacBride report left out such fundamental principles as the right to freedom of thought, opinion and expression, the free circulation of information and ideas, freedom of movement, freedom from censorship and arbitrary Government control and access to all sources of information, unofficial as well as official.
Are those principles no longer of vital concern to such countries as Germany, France, Canada and Australia? In the United States the constitution guarantees freedom of the press. The failure of the United States to give a lead—and it is the biggest piece on our side of the chess board alarms and astonishes me. Once again, the Carter Administration have fallen far below the level of events, presumably because they did not wish to offend such Third world countries as Syria or Cuba. Let us hope that the Reagan Administration are more robust, and let us work to make sure that they are.
I suspect that the basic failure in the West has been to see the new information order as a technical matter, best left to the specialists and interested concerns, rather than as a most dangerous and damaging political assault on Western beliefs and values.
At Belgrade, the Third world set out to shackle the Fourth Estate. Its united strength was used to approve a much larger overall budget for UNESCO, to veto Western proposals to divert funds from UNESCO's research programme to practical assistance projects, to request UNESCO to draw up the basic principles of the new information order and to consider producing a formal charter. According to Rosemary Righter, the conference agreed:
To support a Russian proposal (vehemently opposed by China as well as the West) for an international conference in 1983, which would reopen the question of the role of the media in promoting a whole series of just causes. This goes to the heart of the issue of State control.
I believe that Belgrade should be sending shock waves throughout the West. The implications are immense. Let me read part of a letter sent to me by Mr. Nicholas Herbert, president of the Guild of British Newspaper Editors:
The Guild's primary concern is with the proposal to offer protection to journalists because we can see that there will be a quid pro quo which will represent an unacceptable degree of torsgovernment interference with journalists. The argument will be that, in order to qualify for protection, a journalist will have to behave in some particular way that suits his own government. Alternatively, journalists will have to be registered or licensed, possibly by a trade union, which could produce a kind of international closed shop in journalism.


It is not inconceivable to me that a future Socialist Government in Britain might find here international backing for restricting our press under the guise of protecting and fostering it.
Next, let me; read out part of a speech by Mr. Gerald Long, managing director of Reuters, whose activities have been heavily and most unfairly criticised by UNESCO's director-general, Mr. McBow:
For every UNESCO meeting there is an all-purpose Soviet resolution to hand, saying that information should be used to promote peace and international understanding and to combat war propaganda, racism and apartheid. If you think like me that the purpose of information is to promote nothing but understanding of what the world and our masters are doing to us, the suggestion is that you are in favour of war, racism, apartheid and all other evils, as defined, of course, by the Soviet Union. The UNESCO view of information coincides with that of the Soviet Union: information may legitimately be, indeed always is, used for the purpose of power. UNESCO must therefore be seen to have taken sides on one of the major disputes between two of the great power groups.
We should carefully note those words.
The hour is late, but I wish to put forward a five-point charter for consideration. First, the media in this country and abroad must do more to alert the public and, through them, their political representatives to what has been proposed. Journalists have power of themselves to help themselves. After the conference there were one or two editorial, and then nothing.
Secondly, we should offer the Third world countries bilateral assistance on specific information projects, such as setting up their own news agencies. I am aware that we lave already done much in that direction. We could help to promote high technology support—for example, a complete computerised unit for the production of a daily newspaper. The cost would have to include training in the use of technology and editorial skills. In helping them we would help ourselves. We would demonstrate our belief that the benefits of freedom of information far outweigh the risks.
Thirdly, the Government should discuss the issue with our Community partners, and a suitably strong statement should follow the next meeting of Heads of State, so that the European Community's position is fair and square on he map.
Fourthly, Britain, having performed admirably at Belgrade and having more at stake than most, must take me lead in rallying the West, at least until the United States is ready to take over, against this Soviet-Third world axis.
Finally, The Economist said on 1 November:
If UNESCO comes to define the new order in terms of state control over the media, there will be only one course left for Britain—to get out of UNESCO.
The rationale of such a decision—obviously it assumes a complete failure to get our case accepted—would be that no country should give its moral and financial support to an organisation that is working to curtail its freedom. I am not normally in favour of walking out of international organisations. On the whole, it is better to try to improve them from inside. However, I believe that the Government will have no alternative but to give serious consideration to a possible withdrawal.
I have previously quoted from a magnificent speech by Lord McGregor, given to the IPTC conference in Madrid. I shall end with his beginning:
Free societies are easier to recognise than to define, but liberty of expression is a distinctive element in every definition. That liberty is the ability of any citizen to speak, write and

publish without constraints or fear of punishment, or penalty, save that the rights of other citizens must not be infringed thereby.
As the House will know, in the war for freedom of communication there can never be successful battles, but there can never be a final victory.

The Minister of State, Foreign and Commonwealth Office (Mr. Peter Blaker): I am grateful to my hon. Friend the Member for Bexleyheath (Mr. Townsend) for giving the House the opportunity to debate the new world information order, which he has rightly described as being of great importance. He made a powerful speech, and by no means did he overstate the importance of the matter. I assure him that we shall study his speech with care.
The demand for this so-called new world information order is one that we have viewed with growing concern. As yet, the new order is an ill-defined and rather nebulous concept, full of political rhetoric. None the less, it is one that the Government take seriously because, as my hon. Friend said, it touches on a number of very basic principles regarding the freedom of information. Many Western countries have tended to regard this, as an essentially technical matter, and they have dealt with it accordingly. In our view, it is a political issue and we must deal with it on the political level. If we are to do that effectively, it is important that all those countries that believe in the freedom of information should consult each other and should operate more closely together than they have in the past.
Let me give briefly the background to this issue. The demand has arisen from some developing countries which are strongly critical of the present state of affairs. They argue that the Western media dominate international news flows and that their coverage of the Third world is at best partial and sensational. At worst, they claim, it is biased, inaccurate and unbalanced, and they say that their dependence on the Western media is imposing alien cultural values. They demand, therefore, that their own voices should be heard and that they must be given the capacity to communicate.
We accept that the developing countries are relatively at a disadvantage in communication and that there is a quantitative imbalance in the international flow of information. We share the common aspiration to see these gaps reduced. However, where we part company with many developing countries is in regard to the remedies. For us, the only new order which makes any sense is one which improves significantly on existing arrangements.
We therefore believe that the developing countries should be encouraged to expand their news, and information capabilities by building up the technical resources and professional skills that will enable them to communicate effectively. We already help them to do this. For example, in 1979 we provided under our official aid programme 116 awards for various training courses in the mass media. Thirty-five awards were given for training in telecommunications and a further 37 for courses concerned with adult education and literacy.
We also provide financial assistance for communication projects. Since 1976 at least 23 countries have benefited from our aid to the communication sector, and in 1979 over £27 million was allocated to this sector. In addition, the Foreign and Commonwealth Office has contributed £25,000 to the Commonwealth media


exchange fund established after last year's Heads of Government meeting, and under its sponsored visitors scheme over 200 of those who came in 1979 were concerned with communication. Non-governmental organisations have also contributed. To single out a few the BBC, the Thomson Foundation and the Commonwealth Press Union have undertaken numerous training courses and workshops for people from the developing countries working in the media.
All these channels of assistance remain open. To those who argue that, none the less, relatively little assistance is given to the communication sector, the answer is simple. Most bilateral and multilateral aid is allocated largely in response to the wishes of the recipient countries. This is how it should be, the developing countries themselves deciding on their own development priorities and to which sectors the resources available should be allocated.
What we cannot accept is that international norms and regulations should be imposed or that measures should be taken which, whilst aiming to redress existing imbalances, have the effect of further restricting the present flows of information. We do not seek communication and information simply as instruments of power, as the prerogative of the State and wholly subservient to the political, social and cultural policies of the Government. Our view is that freedom of opinion and the freedom to seek and exchange ideas and information are fundamental human rights and in a democracy cannot be eroded.
This, then, is the danger of the so-called new order: that it will create a climate of opinion hostile to the free flow of ideas and information and will encourage Governments to impose even more restrictions on the media. We are not prepared to endorse Government control of information. Of course, we all know that the media in free countries are not perfect, that there is some trivialisation and some distortion of information. But this is the price that we pay for freedom of information.
Attempts to define internationally the obligations and responsibilities of States in this matter are dangerous. Objectivity and responsibility are not things that can be imposed by international decree but must come from the development of higher standards within the media themselves. Similarly, any codes of ethics should be devised by journalists, not by Governments.
Much of the international debate on communication issues has been concentrated in UNESCO. Although there are those who argue that UNESCO has no business at all in this field, we must face the fact that we cannot take it off UNESCO's agenda. What we have to do is to ensure that UNESCO keeps to its proper role. It should not be a function of UNESCO to devote its energies to the development of universally imposed standards in the field of communication. Nor should UNESCO become the stage for the propagation of one view of communication. Rather it must make what contribution it can to the development of greater capacities to communicate.
The recent general conference in Belgrade again considered many of these issues. I am grateful to my hon. Friend for the generous things he said about the vote of the British delegation and about my own contribution. In particular, the conference had before it the director

general's report on the findings of the international commission for the study of communication problems—the MacBride report, to which my hon. Friend referred.
The British delegation was perhaps the most critical of the report, especially on the grounds that its conclusions left the impression that the evident imbalances in the field of communication should be corrected by increased State intervention or by international directive. The report showed also a marked antipathy towards the commercial sector in the media and seemed to assume that the activities of private firms, as opposed to State enterprises, would inevitably be bad.
As we anticipated, we had a great deal of difficulty with the subsequent negotiations, in which our delegation played a prominent part. These difficulties were compounded by the introduction by some countries of a draft resolution dealing with the MacBride report which purported to lay down a number of principles on which a new world information order should be based. Quite apart from questioning the need for such definition, we believed it wrong to lay down at this stage some principles which could not be comprehensive. It was, therefore, with reluctance that we agreed finally not to stand against the consensus on this resolution. The reason why we took that decision was that if we had done so we would have done so alone.
However, our final acquiescence in a consensus should not be misinterpreted. We took the decision primarily in order to preserve our position in future negotiations, both within the Western group and within UNESCO. As we said in Belgrade, the avoidance of a vote is not the same thing as total agreement. Our statement made immediately after the adoption of the resolution spelt out our strong reservations. In particular, we felt that the "considerations" listed in the resolution were too negative. Too much stress is laid on the right and responsibilities of countries—that is, Governments—and not enough on the right of individuals.
The UNESCO general conference passed another resolution which invited the director general to undertake studies with a view to drawing up the basic principles of a new world information and communication order. We voted against this resolution, believing that such a definition was both unnecessary and undesirable. However, the resolution was adopted. I can assure the House that we shall continue to press strongly our views on this matter. If we are to have such a defintion, we must insist that it asserts unequivocally our basic principles.
A more encouraging development was the establishment of a new international programme for the development of communication. This provides an opportunity for UNESCO to leave aside the ideological questions and to make a real contribution to the many practical issues of communication development. In particular, this programme could provide a consultative mechanism which would make easier the co-ordination of communication assistance, and we hope that it could proceed in an efficient and businesslike manner.
For our part, we have a long and continuing record of substantial assistance to the communication sector in developing countries from both Government and private sources.
I have spelt out some of the things we have done. We believe that our flexible approach has the considerable advantage of being able to respond to the particular needs and circumstances of individual countries. We stand ready


to share our expertise and to assist where we can in the future. This we consider to be a positive and constructive response to the desire for a new world order.
I hope I have demonstrated that the Government take these communications issues very seriously and will continue to do so. We do not intend to relax our vigilance between now and the next general conference in three years' time. We intend to build up co-operation with all those, like ourselves, who believe that there are basic principles at stake.
There are three points which I regard as being of fundamental importance. First, we received invaluable assistance from the media in this country in our preparations for the Belgrade conference. We are determined that the closest co-operation with the media should continue, and we shall arrange for regular and detailed consultations with media representatives with this and in view. Our interests are shared with them, and this should be reflected in our approach to these important issues.
Second, the Belgrade conference displayed a distressing lack of unity in the Western camp. In spite of two

meetings called by the United Kingdom of like-minded countries, we were not able to achieve sufficient concerted action. We shall embark on close consultation with our friends and allies about these issues, both bilaterally and in the organisations to which we and they belong. These questions must be discussed within the European Community, and at gatherings of the Commonwealth. The Western interest is a shared one. We stand together in this matter, just as we do over the other vital questions affecting our freedoms.
Finally, the basis of our activity—and I stress that we intend to be very active in this area—is our strong conviction that the communications issue in UNESCO is a political one, which must be treated as such by all of us. While we must not blind ourselves to the need of the developing world and our own need to respond to it, we must remain alive to the danger that these needs can be exploited by people with no interest in press freedom; and we must continue to uphold the principles of objectivity and truth with all the vigour we can command.

Question put and agreed to.

Adjourned accordingly at nine minutes to Two o'clock.